Infinity Insights – Volume 8, Issue 34

AT-A-GLANCE SUMMARY

Spot NYMEX natural gas (October) rallied from $2.75, nearing $3.00 resistance as the week ends.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (October) has support at 2.88 then 2.75 with resistance at 3.00. Calendar year 2019 has support at 2.70 with resistance at 2.78. Calendar year 2020 has support at 2.60 with resistance at 2.67.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.

Roadmap

NYMEX natural gas spot month (October) finished the week at $2.977, up $0.21.

rd1

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 closed firmer at $2.766, higher by ≈$0.0725.

c19

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 settled ≈$0.022 better at $2.636.

c20

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

Spot NYMEX natural gas (October) rallied from $2.75, nearing $3.00 resistance as the week ends. Technical indicators and differentials tended to be bullish in the rally, a confirming piece. Question is, “so what now?” Spot prices have been range bound and our guess is that this will continue until there’s news to move the market outside the current range.Turning to ERCOT power prices, it’s interesting to note that the peak power heat rates for both 2019 and 2020 remain strong as the chart below illustrates:

ERCOT power prices

The 4 to 6 increase in value is even more interesting when compared to what the corresponding natural gas movement of 15 to 25 cents over the same period. (See below):

Chart

Adequate generation risk is overshadowing feedstock cost risk, which makes sense. The import of recognizing this is when one looks at the deferred values of both curves and the discounted offerings.