Against a backdrop of broader energy market anxieties over a potential escalation in the conflict in Ukraine, natural gas 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 crude oil futures were trading $1.02 higher at $84.96/bbl.
The early energy gains came amid reports that Russia plans to add forces to its war effort in the ongoing invasion of Ukraine, a conflict that has for months rattled global energy markets.
“Russia’s mobilization of 300,000 reservists to reinforce its war effort against Ukraine is reviving flagging energy risk premiums around 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, according to ICAP Technical Analysis.
“No follow through from the bulls, so stuck in neutral for the moment,” ICAP analyst Brian LaRose said in a note to clients. “To suggest we could be looking at bottoming action the bulls must immediately and aggressively start chipping away at the ratio retracements associated with the $9.238 high.”
Bears, meanwhile, “just need to crack Monday’s $7.404 low to set our sights lower,” the analyst added.
LaRose pegged the next 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, according to NatGasWeather. The firm said it views the upcoming pattern as “slightly bullish” in 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 high pressure continuing to bring very warm to hot conditions from Texas to the Mid-Atlantic Coast,” NatGasWeather said. “…A warmer than normal pattern is still expected to rule most of the U.S. the first week of October, which this late in the year will result in very light demand across the northern U.S., while only modest demand for cooling across the warm southern U.S.”
A potential “wild card” in the weather outlook was brewing in the tropics as of early Wednesday in the form of a “strengthening tropical wave tracking in the Caribbean the next few days,” the firm added. “Some of the overnight weather data continues to tease this system will reach the Gulf of Mexico next week, thereby requiring close monitoring.”
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September 21, 2022 at 08:03PM
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As Russia Signals Escalation in War Effort, Natural Gas Futures Rally Early - Natural Gas Intelligence
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