Infinity Insights – Volume 9, Issue 24
AT-A-GLANCE SUMMARY
Coming out of the long holiday weekend, ERCOT experienced significant heat, something that was coincidental to (and likely a catalyst for) firming of the front of the curve.
SUMMARY OF THE LAST WEEK IN CHARTS
Spot month natural gas (August) has support at 2.18, with resistance at 2.50. Calendar year 2020 has support at 2.50 with resistance 2.62. Calendar year 2021 has support at 2.55 with resistance at 2.63.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.
RoadmapNYMEX natural gas spot month (August) closed $0.145 higher at $2.453.
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 20Calendar 2020 ended ≈$0.07 higher at $2.605.
What’s This? – “Cal 20” 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 21Calendar 2021 settled ≈$0.0175 better at $2.60.
What’s This? – “Cal 21” 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
Coming out of the long holiday weekend, ERCOT experienced significant heat, something that was coincidental to (and likely a catalyst for) firming of the front of the curve. Currently, there is a possibility of tropical weather cooling things off. As most agree, hurricanes are usually bearish events, yet the emotions of the moment can increase volatility. Offshore production will take a hit due to regards for safety, but we have lots of gas.Our expectations are for price action to remain in a trading range ($2.18 – $2.50) unless weather takes control (range could expand to $2-$3).In closing, residential electricity price deserves comment in the current environment where many Retail Electric Providers (REPs) are offering a “deal.” There are plans for “free energy” during the weekend, highest consumption days, and other marketing ploys. One newcomer offers “wholesale power” (see note below). Assuming the REPs want to stay in business, they aren’t selling at losses. So how can the average consumer figure out good deals versus bad? Our answer: Divide the total usage into the total energy cost. Transparency is the key.NOTE: “Wholesale Power” in this context refers to real time power pricing denominated in $/MW and labeled Locational Marginal Pricing (LMP).