Infinity Insights - Volume 13, Issue 21

AT-A-GLANCE SUMMARY

The $2 level has proven to be solid support for spot NYMEX natural gas.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (July) support at 2.50 then 2.00 with resistance at 3.25. Calendar year 2024 finds support at 3.40 with resistance at 4.00. Calendar year 2025 has support at 3.75 with resistance at 4.35.

Roadmap

NYMEX natural gas spot month (July) settled lower by $0.163 at $2.254

Compared to close Friday 5/26

Cal 2024
Calendar 2024 ended down by ≈$0.115 at $3.535

Compared to close Friday 5/26

Cal 2025
Calendar 2025 closed off by ≈$0.175 at $3.805

Compared to close Friday 5/26

The “Widow Maker”

2024

Volatility…

OUR TAKE ON THE MARKETS

NYMEX Natural Gas

The $2 level has proven to be solid support for spot NYMEX natural gas. The sideways action is characterized as a holding pattern waiting for weather (summer heat). That heat now forecasted to show up in the last half of June. Procurement management needs to be mindful of risk so that any weather spike may be avoided.

Summer is here and electricity users face the perils of extreme heat. ERCOT uses, in part, historical demand for the grid as a whole and demand for each asset specifically. The measurement is the highest demand for each summer month (June, July, August, and September), referred to as 4CP (See: https://www.ercot.com/mktinfo/data_agg/4cp ). A load’s demand on the day of highest total grid demand establishes the level that is set aside for each load. If it is a high number, then the load is charged for that demand through the following calendar year. Managing this risk can be a different exercise for the various loads in Texas. Some large, sophisticated loads with optionality (ability to shed load, kick in on site generation) are very adept. Other, smaller loads with less optionality might approach risk management by cutting back demand when alerted that a peak may be set for the grid. This is load shed at its simplest level.

The financial impact is measureable and this calculation should be made for each load. By tempering summer heat with price level management, some degree of mitigation is possible. As the majority of our clients fall into the passive management category, managing 4CP risk may be simply looking at weather and avoiding what load can be controlled. Regardless of specific strategy, all users can benefit from keeping a mindful eye on weather forecasts.

WHOLESALE POWER

ERCOT

Natural gas leads the way.

PJM

Natural gas leads the way.