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Energy Markets Gyrate Wildly


While the trade has accepted the fact that a ban on Russian energy exports is unlikely (with the US administration suggesting that would exert more harm on us than Russia) the powerful upward track in oil prices has stalled. On the other hand, the crude oil market has shown amazing resiliency over the past 2 1/2 months and the last COT positioning report showed the market to have significant residual buying capacity. In fact, given the potential to embargo supply from one of the largest energy exporters that should provide a major cushion for prices.

Like the crude oil market, the gasoline market gyrated wildly yesterday with a range of $0.19. On the other hand, a sharp range up in significant reversal overnight erodes the bullish technical condition. With fundamentals capable of changing without notice, traders should refer to classic technical signals. While it is well documented, Russian exports of energy products are extremely critical to the world market, but the lack of specific sanctions against fuel supplies and a lack of widespread global participation in the sanctions, fosters some bearish confidence.


As indicated in petroleum coverage today, there are difficulties in implementing a broad-based blockage of Russian gas exports. In fact, there are reports overnight that extreme Russian discounts have prompted a wave of buying by European buyers especially with Russian prices below European spot prices! However, it is possible that Russia itself will resort to hitting Europe by shutting down gas pipelines in Ukraine. In fact, gas supply is already tight in Europe and cold weather is forecast for next week.

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