STP Update – Sep 14
The RFC released this week’s STP today; the changes are reflected in the daily energy chart:
We are not surprised by the increase in energy; the government tipped its hand last week when it jacked up its 10 day forecasts; this report is just confirmation of what we already knew. And what we already know/knew is that BOM Mid-C is going to bomb on no loads and reasonably stout water.
Note that this new water is mostly front-end loaded and is coincidental to the transmission derates; we’ve hated the Oct for a while, now we hate it more. So does the market as is so plainly evident in the following plot of market and forecasts:
Wait, is that the market chasing the forecast? By golly it is, again … and as they say, sometimes, better late than never. In conclusion a whole lot of SLICE customers just got themselves longer and should be hitting bids tomorrow morning. Watch for an overreaction and cover your shorts … at these levels we are thinking of going long for no other reason than the market has now embraced the forecast and that is a no-no.
Speaking of a no-no, a few weeks back I faded our forecasts and suggested going long the Oct SP-MidC; seems I was right on that sentiment:
For the record I’d take my $2.00 gain and go flat; the ever-widening deltas keep me from further owning that fade.