About this time last month, G&A wrote about the role that fuel switching would take in moderating the price rally above $3/MMBtu, predicting that coal generation would stage a comeback in several key regions.
This did in fact occur, as total coal-fired power surpassed natural gas in PJM, MISO, and SPP for the first time in about a year. However, with NYMEX selling back below $3 and persistent weakness in spot prices throughout November, switching back to gas has increased and will strengthen weather-adjusted demand even as temperatures turn colder early this month.
The market is in a battle to balance fuel switching with weather and independent market fundamentals through price. The $2.90-$3 threshold remains a crucial pivot point for prices and will now serve as resistance until the market proves that either demand is too strong or supply too weak at these lower price levels.
Source: Gelber & Associates
Follow on Twitter:Tweets by "GelberCorp"