Against a backdrop of broader energy market anxieties over a possible escalation within the conflict in Ukraine, fossil fuel futures rallied in early trading Wednesday. The October Nymex contract was up 23.0 cents to $7.947/MMBtu as of around 8:45 a.m. ET.
West Texas Intermediate front month oil futures were trading $1.02 higher at $84.96/bbl.
The early energy gains came amid reports that Russia plans to feature forces to its war effort within the ongoing invasion of Ukraine, a conflict that has for months rattled global energy markets.
“Russia’s mobilization of 300,000 reservists to strengthen its war effort against Ukraine is reviving flagging energy risk premiums round the world,” EBW Analytics analyst Eli Rubin said.
From a technical standpoint, the market remained “stuck in neutral” following Tuesday’s 3.5-cent sell-off for the October contract, per ICAP Technical Analysis.
“No follow through from the bulls, so stuck in neutral for the instant,” ICAP analyst Brian LaRose said in a very note to clients. “To suggest we might be viewing bottoming action the bulls must immediately and aggressively start chipping away at the ratio retracements related to the $9.238 high.”Bears, meanwhile, “just have to crack Monday’s $7.404 low to line our sights lower,” the analyst added.
LaRose pegged the subsequent downside targets in such a scenario at $7.122-6.961, $6.744 and $6.413-6.331-6.194.
Meanwhile, modeling dropped weather-driven demand from the outlook overnight, in keeping with NatGasWeather. The firm said it views the upcoming pattern as “slightly bullish” within the near-term but bearish-leaning starting this weekend and continuing through Oct. 7.
“No major changes to the timing of major weather features to impact the U.S., starting with unseasonably strong air mass continuing to bring very consider hot conditions from Texas to the Mid-Atlantic Coast,” NatGasWeather said. “…A warmer than normal pattern continues to be expected to rule most of the U.S. the primary week of October, which this late within the year will lead to flare demand across the northern U.S., while only modest demand for cooling across the nice and cozy southern U.S.”
A potential “wild card” within the prognosis was brewing within the tropics as of early Wednesday within the sort of a “strengthening tropical wave tracking within the Caribbean the following few days,” the firm added. “Some of the overnight weather data continues to tease this technique will reach the Gulf of Mexico next week, thereby requiring close monitoring.”
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