Natural Gas and Oil Analysis: Geopolitical Tensions Fuel Price Surge

By:

Updated: Jan 5, 2024, 13:22 GMT+00:00

Oil prices rally amid intensifying Middle East conflict, with Brent and WTI crude experiencing notable gains ahead of crucial U.S. labor market data.

Oil Prices Rise Amid Middle East Tensions: Oil prices see gains with Brent crude at $78.03/barrel and WTI at $72.76/barrel, as geopolitical tensions in the Middle East escalate.
USOIL and UKOIL Await Key Data: Both USOIL and UKOIL trends are influenced by upcoming U.S. labor data and Euro zone inflation, impacting market dynamics.
Natural Gas Faces Downward Pressure: Natural Gas trades at $2.69, down by 2.71%, with a bearish sentiment below the $2.77 pivot point.

Quick Fundamental Outlook

Oil prices experienced an uptick on Friday, influenced by geopolitical developments and anticipation of U.S. Secretary of State Antony Blinken’s Middle East visit to address the Israel-Gaza conflict. Both benchmarks are set to conclude the week on a higher note, rebounding from Thursday’s losses caused by significant U.S. gasoline and distillate stock builds.

This rise in oil prices is partly attributed to escalating tensions in the Middle East, including a targeted approach by Israeli forces and ongoing actions against Hamas. The potential expansion of the conflict, coupled with other regional incidents, is heightening market concerns.

Macro-economic factors, like Euro zone inflation data and the U.S. Federal Reserve’s stance on monetary policy, are also under close watch. Investors are evaluating the implications of these data on potential interest rate cuts, which can stimulate economic growth and boost oil demand.

The upcoming U.S. payroll and unemployment data will further guide market sentiments and impact oil prices, affecting both USOIL and UKOIL.

Natural Gas Price Forecast

Natural Gas Chart

Natural Gas (NG) is currently experiencing a notable downturn, trading at $2.69 with a significant 2.71% decline. The technical outlook reveals a pivot point at $2.77, with the immediate resistance levels set at $2.86, $2.99, and $3.07. Key support levels are located at $2.62, $2.48, and $2.35.

The Relative Strength Index (RSI), currently at 58.00, suggests a slightly bullish sentiment, though the asset is experiencing a downtrend. The 50-Day Exponential Moving Average (EMA) at $2.57 indicates a short-term bearish trend.

A notable double top pattern extends resistance at the $2.77 level, suggesting strong selling pressure below this mark. A bullish breakout above this could, however, shift the trend. Overall, NG maintains a bearish outlook, particularly if it stays below the pivotal $2.77 level.

WTI Oil Price Forecast

WTI Price Chart

US Oil (USOIL) currently displays a modest rise in its market dynamics, trading at $72.58 with a 0.34% increase. The technical landscape of USOIL is framed by several key levels: a pivotal point at $71.35 and immediate resistance levels at $73.99, $76.11, and $78.02.

Meanwhile, support levels are set at $70.19, $69.07, and $67.70. The Relative Strength Index (RSI) stands at 51.00, indicating a neutral to slightly bullish sentiment. The 50-Day Exponential Moving Average (EMA) at $72.710 suggests a narrow bullish trend. A significant chart pattern is the symmetrical triangle, indicating consolidation within a narrow range.

The current technical outlook for USOIL is neutral to bearish, especially if it falls below the $73 mark. Investors and market analysts will be closely watching these technical indicators for future direction cues.

Brent Oil Price Forecast

UKOIL Price Chart

UK Oil (UKOIL) exhibits a subtle increase in its market position, trading at $77.79, a rise of 0.23%. The technical analysis presents a pivot point at $77.02, with key resistance levels identified at $79.24, $81.51, and $83.06. Support for UKOIL lies at $74.77, $73.56, and $72.45.

The Relative Strength Index (RSI) sits at a neutral 50.00, indicating an equilibrium between bullish and bearish sentiments. The 50-Day Exponential Moving Average (EMA) at $78.07 suggests a slight bearish trend. Currently, a symmetrical triangle pattern is observed, indicating a consolidation phase.

The overall trend for UKOIL leans towards bearish, particularly if it remains below the $80 threshold. This near-term outlook suggests potential downward movements unless key resistance levels are surpassed.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.