Infinity Insights - Volume 12, Issue 4

AT-A-GLANCE SUMMARY

Forecast for colder weather pushed prices higher after stalling under $4.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (March) support 4.40 then 4.00 with resistance at 5.00. Balance of Calendar year 2022 finds support at 4.25 with resistance at 4.75. Calendar year 2023 has support at 3.65 with resistance at 4.00.

For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.

Roadmap

NYMEX natural gas spot month (March) ended up $0.857 at $4.639 compared to last Friday's close.

Balance of Calendar 2022

Balance of Calendar 2022 settled ≈$0.68 higher at $4.615.

Calendar 2023

Calendar 2023 closed up by ≈$0.245 at $3.67.

OUR TAKE ON THE MARKET

THE "WIDOW MAKER"

Volatility…

NYMEX Natural Gas

Forecast for colder weather pushed prices higher after stalling under $4. Open interest continued to reflect liquidation which took on a significance unexpected as spot month February expired on Thursday. There was a classic short squeeze* that pushed prices up $3 at one time. This is an aberration of expiring commodity futures in delivery where one literally needs to put up or shut up. Without sellers, shorts are at the mercy of others to cover their positions. One alternative is to make physical delivery - something that isn’t common as, usually, positions are offset before expiration. Overstaying one’s welcome is risky.

*Short sellers borrow shares of an asset they believe will drop in price in order to buy them after they fall. ... The flight of short sellers and their impact on a stock's (or commodity’s) price is known as a short squeeze. Short sellers are being squeezed out of their positions, usually at a loss…(Investopedia)

The new spot month (March) moved higher, but not to the extent of February. The advantage of buying weakness is apparent.

The major concern we have is what would happen to domestic natural gas prices should the Ukraine-Russia confrontation expand? The gas supply from Russia would likely stop, which would put a premium on alternatives such as LNG imports. That said, how much more might the U.S. supply? There’s a finite number of ships. International trade would suffer and economies would likely take a hit. We are not sure of the answer and caution accordingly.

WHOLESALE POWER

ERCOT

Heat rates remain static with prices following natural gas.

PJM

Natural gas determines price direction.