Infinity Insights – Volume 9, Issue 38
AT-A-GLANCE SUMMARY
The NYMEX spot-month contract (December) sideways trade between $2.35 and $2.56 continues like November trade, albeit at a higher range.
SUMMARY OF THE LAST WEEK IN CHARTS
Spot month natural gas (December) has support at 2.38 with resistance at 2.56. Calendar year 2020 has support at 2.38 with resistance 2.45. Calendar year 2021 has support at 2.42 with resistance at 2.48.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.
RoadmapNYMEX natural gas spot month (December) ended the week down $0.058 at $2.459.
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.
Calendar 2020Calendar 2020 closed ≈$0.0475 lower at $2.3725.
What’s This? – “Cal 2020” 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 2021Calendar 2021 settled at $2.42, lower by ≈$0.015.
What’s This? – “Cal 2021” 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
NYMEX Natural GasThe NYMEX spot-month contract (December) sideways trade between $2.35 and $2.56 continues like November trade, albeit at a higher range. There remains a lack of weather and, without some catalyst, sideways is a reasonable answer.
WHOLESALE POWER
ERCOTThe meteoric rise of heat rates in ERCOT has poised many questions for analysts, one that some have over-complicated. The pictures below tell the story (almost):An industry veteran proffered what is probably the right answer: Wholesale power price. There are two curves comprising wholesale power: natural gas (feedstock) and heat rate (cost of generation + capacity). Natural gas has a real struggle moving higher (lots of gas). If power prices go higher, it’s the other curve (heat rates) pushing prices higher, not as standalone but as the variable part of the formula. Are generators selling generation/capacity through heat rates? Probably, but our guess is that they feel no rush to do so currently.PJMPJM prices have been moving up the forward curve as winter approaches.