Infinity Insights - Volume 11, Issue 14

AT-A-GLANCE SUMMARY
Spot NYMEX natural gas continues to trade between 2.50 and 2.70 without much fanfare.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (May) support is 2.50 then 2.35 with resistance at 2.70. Balance of Calendar year 2021 finds support at 2.65 with resistance at 2.85. Calendar year 2022 has support at 2.55 with resistance at 2.80.

Roadmap

NYMEX natural gas spot month (May) settled higher at $2.68, up $0.154.

Balance of Calendar 2021
Balance of Calendar 2021 ended up by ≈$0.13 at $2.855.

Calendar 2022
Calendar 2022 closed at $2.70, ≈$0.04 better.

OUR TAKE ON THE MARKET

NYMEX Natural Gas

Spot NYMEX natural gas continues to trade between 2.50 and 2.70 without much fanfare. The forward curve has held support and moved higher. Weather (late cold) is supporting the complex.

WHOLESALE POWER

ERCOT
LMP moved higher with April averages above $60/MW. Earlier in the week, there was an ERCOT request for energy conservation that concerned itself with resource adequacy. This was coincidental to a price spike. Given the February experience of unbelievably high LMP, there is a considerable concern of a change in pricing practices and protocols with the current price levels as examples. We share these concerns. We no longer have confidence in LMP risk management history and its “comfort levels”. With the level of forward curve pricing relatively low, fixed price is a reasonable cost of insurance. Real-time pricing (LMP) has provided the first “dog bite” in February, so we’re forewarned.

Heat rates continue higher as the chart below depicts:

PJM

Prices have moved off lows with natural gas.