Natural Gas and Oil Analysis: Geopolitical Tensions and Supply Dynamics

By:

Published: Dec 27, 2023, 14:18 GMT+00:00

Oil prices faced a downturn on Wednesday, with Brent crude and U.S. West Texas Intermediate crude retreating from previous gains amid geopolitical tensions and supply concerns

In this article:

Natural Gas

-4.05%

WTI Oil

-0.58%

Brent Oil

-0.89%

Key Insights

Brent crude futures and U.S. West Texas Intermediate crude saw declines on Wednesday, reflecting a retreat from Tuesday’s gains.
Increased naval patrols and ship rerouting in the Red Sea, due to Houthi militia attacks, impact shipping giants like Maersk and CMA CGM.
Israeli military actions in Gaza and disruptions in Russia’s Novorossiisk port contribute to market uncertainties.
Anticipated decreases in U.S. crude stocks and upcoming inventory reports are key factors to watch.
The geopolitical and supply dynamics significantly influence the market prices of Natural Gas, USOIL, and UKOIL.

Quick Fundamental Outlook

Oil prices decreased by about $1 per barrel on Wednesday, partially reversing Tuesday’s gains. Brent crude futures dropped 1.16% to $80.13 a barrel, and U.S. West Texas Intermediate crude fell 1.39% to $74.52.

This decline was attributed to investor profit-taking after Tuesday’s rally, per UBS analyst Giovanni Staunovo. Shipping concerns in the Red Sea, due to recent Houthi militia attacks, have prompted increased naval patrols and rerouting of ships, affecting companies like Maersk and France’s CMA CGM.

Meanwhile, Israeli military actions in Gaza and disruptions at Russia’s Novorossiisk port due to a storm add to the market’s uncertainties. U.S. crude stock levels are anticipated to have dropped last week, with upcoming inventory reports from the American Petroleum Institute and the Energy Information Administration awaited.

This situation impacts Natural Gas, USOIL, and UKOIL, as geopolitical and supply dynamics play a significant role in shaping their market prices.

Natural Gas Price Forecast

Natural Gas Chart

Natural Gas (NG) is currently displaying a dynamic performance in the commodities market. As of the latest data, NG is trading at $2.4720, marking an upward movement of 2.35%. This bullish trend is shaped within a strategic framework of pivotal technical levels. The immediate resistance levels are set at $2.64, $2.80, and $2.99, while support is found at $2.31, $2.20, and $2.06.

The Relative Strength Index (RSI) for NG is at 54, indicating a moderately bullish sentiment. This is supported by the Moving Average Convergence Divergence (MACD), currently at 0.006, just below its signal line at 0.013, hinting at potential shifts in momentum.

Chart patterns reveal an upward channel supporting NG around the $2.45 level, with resistance observed near $2.50. This pattern suggests that if NG can sustain above the $2.50 pivot point, it could indicate further bullish potential.

In conclusion, the overall market trend for NG appears to be bullish above the $2.50 mark, pointing to potential upward movement in the short term.

WTI Oil Price Forecast

WTI Price Chart

In today’s commodities market, USOIL exhibits a nuanced technical stance, currently trading at $74.40, marking a 1.05% decrease. This movement unfolds within a framework of key support and resistance levels.

The immediate resistance lies at $76.11, with further barriers at $77.67 and $79.62, while support levels are established at $70.92 and $69.07, with a crucial lower support at $67.70.

The Relative Strength Index (RSI) at 51 suggests a neutral market sentiment, hovering around the midpoint between overbought and oversold conditions. The Moving Average Convergence Divergence (MACD) at 0.020, however, contrasts with its signal line at 0.490, indicating potential shifts in momentum.

USOIL is trading above the 50-Day Exponential Moving Average (EMA) of $72.98, which typically suggests a short-term bullish trend. However, the presence of a double top pattern extending resistance at $76.12 introduces a bearish outlook. This pattern suggests that USOIL may face resistance in surpassing this level, thus influencing its short-term trajectory.

In conclusion, the overall trend for USOIL appears bearish below the $76.12 threshold, implying that if prices fail to break this resistance, a downward movement could be anticipated in the near future.

Brent Oil Price Forecast

UKOIL Price Chart

UKOIL is currently navigating a complex market environment, as indicated by its latest trading price of $79.71, down by 1.05%. This price movement is occurring within a framework of critical technical levels.

The current resistance points are situated at $83.06 and $84.64, with a further significant level at $87.05. On the support side, the asset finds stability at $78.36, with additional foundational levels at $75.98 and $73.82.

Technically, the Relative Strength Index (RSI) stands at 51, which reflects a neutral stance in the market, neither overbought nor oversold. The Moving Average Convergence Divergence (MACD) value at -0.01, compared to its signal line at 0.51, suggests a possible shift in momentum.

A notable aspect in UKOIL’s chart pattern is the presence of a double top extending resistance near $80.00. This pattern indicates that if the asset fails to surpass this resistance, it may trigger a bearish trend. Meanwhile, UKOIL trades above its 50-Day Exponential Moving Average (EMA) of $78.84, which could suggest a short-term bullish inclination.

In summary, the overall trend for UKOIL seems bullish above the $78.84 level. Should the price maintain above this EMA, it may indicate potential for further upward movement.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

Did you find this article useful?