Infinity Insights – Volume 9, Issue 2

AT-A-GLANCE SUMMARY

A technical buy signal was generated this week when spot prices spiked higher on Monday, leaving a gap that created an island reversal formation.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (February) has support at 3.20 with resistance at 3.50 then 3.90. Calendar year 2019 has support at 2.90 with resistance at 3.05. Calendar year 2020 has support at 2.72 with resistance at 2.80.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.

Roadmap

NYMEX natural gas spot month (February) finished at $3.482, $0.383 higher.

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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 was higher by $0.1375 at $3.015.

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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 ended unchanged at 2.75.

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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

A technical buy signal was generated this week when spot prices spiked higher on Monday, leaving a gap that created an island reversal formation. On Friday, prices attempted to fill the gap but didn’t quite make it. While there is nothing guaranteed, expectations are for higher prices. Weather will play a big part in sustaining this signal or failing. A test of $4 level is in the cards given colder weather.Turning to ERCOT wholesale power, the first 2 years of heat rates is at or near the highs while deferred years are moving lower. It’s evidence of capacity demand up front. Bull spreads continue to work.

ORDC (Operating Reserve Demand Curve)

There is a change for how generators are paid for in Texas. The ORDC is a pricing mechanism to ensure that electricity prices accurately reflect shortages of power. This is most often a summer issue where stress is most apparent (incremental demand, asset loss, etc.). The impact will be determined by the event. There is a lot of discussion regarding what this means, but answers won’t be meaningful until the money flows.General consensus is for prices to go higher. To what degree is anyone’s guess? Be aware that this line item may materially raise costs.