Infinity Insights - Volume 11, Issue 45
AT-A-GLANCE SUMMARY
The gap discussed last week was filled on Monday.
SUMMARY OF THE LAST WEEK IN CHARTS
Spot month natural gas (January) supports 3.62 with resistance at 4.02. Calendar year 2022 finds support at 3.60 with resistance at 4.25. Calendar year 2023 has support at 3.35 with resistance at 3.65.
Roadmap
NYMEX natural gas spot month (January) finished down by $0.235 at $3.69
Calendar 2022
Calendar 2022 closed ≈$0.225 off at $3.8825.
Cal 2023
Calendar 2023 settled off by ≈$0.065 at $3.3275.
OUR TAKE ON THE MARKET
THE "WIDOW MAKER"
Volatility…
NYMEX Natural Gas
The gap discussed last week was filled on Monday. Given 80-degree weather, they promptly fell to recent lows where support was evident. The tug of war between winter expectations and extreme heat is the driver.
Looking at the full curve, we find support upfront and over-priced values in the deferred when compared to the front. Prompt NYMEX natural gas has dropped $2.50 from its high while the back calendar strips retreated only about $.20. The disparity made sense when prices were in free fall, but not so much with the front firming. The lesson to be learned is that bear spreads reverse course eventually. This tendency advises waiting on back values for locks.
WHOLESALE POWER
ERCOT
Prices again are led by natural gas with little movement in heat rates.
LMP pricing appears to have settled down. Innovations include the proposed ban for residential and small commercial loads, all others with a $2,000 cap. Suitable loads may be interested in index structures going forward.
PJM
Prices are off their highs following natural gas.