Infinity Insights – Volume 8, Issue 18

AT-A-GLANCE SUMMARY

ERCOT continues to be concerned about summer demand.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (June) has support at 2.60 with resistance at 2.80 then 2.90 Calendar year 2019 has support at 2.67, then 2.60 with resistance at 2.76. Calendar year 2020 has support at 2.65 with resistance at 2.72.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.

Roadmap

NYMEX natural gas spot month (June) moved higher by $0.041 and closed at 2.847.

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What’s This? – The “Roadmap” is the price action chart depicting the NYMEX natural gas spot month. It’s important because it is essentially the trading community’s market sentiment.

Cal 19

Calendar 2019 settled up ≈$0.04 at $2.75.

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What’s This? – “Cal 19” is the first complete 12-month strip. It gives you a visual of price action and provides a reference point for our take on the market.

Cal 20

Calendar 2020 finished at $2.6885, ≈$0.018 better.

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What’s This? – “Cal 20” is the second complete 12-month strip. It gives you a visual of price action and provides a reference point for our take on the market.

OUR TAKE ON THE MARKET

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Spot NYMEX natural gas (June) has traded to the high end of the $0.20/MMBTU range experienced since February. The spot continuation chart paints this picture below:Will this pattern be broken? If so, it’ll add fuel to the fire of volatility; if not, we suspect that power volatility won’t go away regardless. Simply put, natural gas hasn’t been particularly active, but heat rates have:Note that heat rate values began spiking February 2018. They have risen to current levels (4+ higher). With $2.80ish natural gas, the wholesale power price is $10+ MW higher. The force behind this includes folks who don’t want to gamble on weather. These are likely the same people who have lifted real time (LMP) prices and enjoyed lower prices. The fear is the unknown. Can prices hit $200? $2,000? Who knows? With less than 3 months to the meat of summer heat, answers will reveal themselves soon.ERCOT continues to be concerned about summer demand. Most of us are familiar with the concern, but have no way of visualizing where prices are in relation to “normal”. Summer demand peaks are usually in July and August, so following price action there may help in putting things in perspective. Below find charts of peak demand (5 x 16) pricing for July and August 2018:Stay tuned…