Infinity Insights – Volume 8, Issue 35

AT-A-GLANCE SUMMARY

Volatility has returned to natural gas price action albeit limited to the front of the curve.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (November) has support at 3.10 then 3.00 with resistance at 3.25 then 3.45. Calendar year 2019 has support at 2.78 with resistance at 2.92. 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 (November) closed at $3.143, up $0.169 compared to the close of 9/21.

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 finished at $2.84, up ≈$0.077.

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 ended ≈$0.024 up at $2.66.

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

The last “Insights” (September 21st) discussed the rally to $3 area and the technical resistance there. We opined that the market would likely mark time waiting for next direction. That direction was higher. Winter outlook for cold weather + storage deficit were the reasons cited most often. The action is in the first 5 months with the back of the curve defensive. The next technically significant area is found at $3.25ish. Volatility has returned to price action albeit limited to the front of the curve.Turning to ERCOT power, the other curve, heat rate, has likewise moved higher. This action was across the board and dramatic (see charts below):

ERCOT power prices

Chart

The result has been a $3 to $5 increase in wholesale values (this has been paralleled in PJM as well).Interesting comments from trade have been centered on confusion as to the strength. Related discussion about choice of chasing market or waiting for pullback. Tough call as we move into winter, one that places penalty for waiting to act. Waiting for <$40 wholesale may prove overly optimistic.