Infinity Insights – Volume 8, Issue 39
AT-A-GLANCE SUMMARY
After marking time in a 3.10 – 3.40 range, spot month NYMEX natural gas (December) gapped higher on Monday due to cold weather forecast.
SUMMARY OF THE LAST WEEK IN CHARTS
Spot month natural gas (December) has support at 3.58 then 3.40 with resistance at 4.00. Calendar year 2019 has support at 2.92 with resistance at 3.06. Calendar year 2020 has support at 2.67 with resistance at 2.75.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.
Roadmap
NYMEX natural gas spot month (December) closed at $3.719, higher by $0.494 compared to October 26th.
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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 finished up ≈$0.14 at $2.97.
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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 closed higher by ≈$0.035 at $2.70.
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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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After marking time in a 3.10 – 3.40 range, spot month NYMEX natural gas (December) gapped higher on Monday due to cold weather forecast. Volatility continues to be a factor. Will the breakout gap hold or will it retrace to 3.40ish area? Gaps such as this are bullish. Watch for additional gaps (measuring, exhaustion) as indicators of continued strength or lack thereof. Regardless of the front of the curve movement, the back of the curve has stayed steady as the chart below depicts (Red line is 10/31 and blue line is 11/9):The point of this chart is to point to curve characteristics that remind us that action up front higher may be accompanied by weaker prices in the deferred.For ERCOT power, the weakness of natural gas in back is more than offset by the rise of heat rates depicted in the charts below:We suspect that the lowest prices for natural gas and power are behind us. Market action supports that view. Looking at the wholesale power curves, below, illustrate the transition from a laid back, flat curve to one that’s volatile and often nervous.Risk is to the upside.