Infinity Insights - Volume 12, Issue 1

AT-A-GLANCE SUMMARY

Over the past three weeks, NYMEX natural gas price has changed.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (February) support 3.50 with resistance at 4.00. 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 February) closed up by $0.277 at $3.916 compared to close of 12/17

Calendar 2022
Balance of Calendar 2022 closed up by $0.184 at $3.81

Cal 2023
Calendar 2023 closed up by $0.102 at $3.4

OUR TAKE ON THE MARKET

THE "WIDOW MAKER"

Volatility…

NYMEX Natural Gas
Over the past three weeks, NYMEX natural gas price has changed. This change found the front of the curve firmer than the back. The price action for spot month natural gas has been a sideways trade between 3.50 and 4.00.

Details of price movement:

What, if anything, might we gather from this data? Our take is that the market, in its descent, traded as a bear spread with the back firmer than the front. Currently, the front has firmed and the back appears subject to sell-offs. This reversal indicates change. The back calendar strips historically trade between 2.50 and 3.00. Today, they’re all above 3.00. We believe deferred values are over-priced and locking.

The travails of 2021 need no explanation. Hopefully, the unusual components of last year (pandemic, extreme weather, economic uncertainty) will fade over time and predictability will improve (no one we know of foresaw 80+ degree temps on Christmas Day in Houston). Time will tell.

WHOLESALE POWER

ERCOT

Heat rates have remained relatively flat. Natural gas movement guides power price.

PJM

Natural gas movement guides power price.