Natural Gas and Oil Analysis: Inventory Builds and Mideast Tensions Shape Futures

Key Insights

• U.S. Natural Gas futures drop, EIA report awaited.
• Expected 81 Bcf build in gas storage, futures at $3.408.
• Middle East tensions threaten oil supplies.
• Iran urges Muslim states to boycott Israel.
• Global oil demand at 102.1 million barrels/day.

Quick Fundamental Outlook

U.S. Natural Gas futures dipped as the market anticipates the upcoming U.S. Energy Information Administration’s (EIA) Weekly Storage Report. A build of 81 billion cubic feet (Bcf) is expected, compared to last week’s 74 Bcf and last year’s 99 Bcf. The five-year average for this period is 57 Bcf. Natural gas futures were trading at $3.408, down by 2.46%.

Middle Eastern tensions, particularly Iran’s call to halt oil and food exports to Israel, could disrupt oil supplies, affecting global markets including U.S. oil. Oil demand estimates from J.P.Morgan stand at 102.1 million barrels-per-day, with U.S. crude stocks rising due to slow refinery restarts post-maintenance. These developments suggest potential volatility for both U.S. oil and natural gas prices.

Natural Gas Price Forecast

Natural Gas (NG) is currently trading at $3.48, registering a notable decrease of 169% over the past 24 hours. On the 4-hour chart, the pivot point stands at $3.45320, with immediate resistance levels observed at $3.66240, $3.79940, and $3.94910. Support levels are found at $3.27900, $3.14480, and $3.00820, which could act as critical junctures for price reversals.

The Relative Strength Index (RSI) stands neutrally at 50, indicating a balance between buying and selling pressures. The Moving Average Convergence Divergence (MACD) presents a negligible difference, with a value of -0.002 crossing above the signal line at 0.028, hinting at potential upward momentum. The 50-Day Exponential Moving Average (50 EMA) at $3.44, just below the current price, suggests a nascent bullish trend.

An upward trendline on the 4-hour chart provides support for Natural Gas at the $3.4 area. A decisive close above this level could catalyze a buying trend. Overall, the trend for NG is bullish above the $3.44 mark. Short-term forecasts anticipate the asset testing its immediate resistance at $3.66240 in the upcoming sessions, contingent on the market maintaining its current momentum.

WTI Oil Price Forecast

WTI Crude Oil (WTI) has seen a mild uptick in its 24-hour movement, with the price standing at $81.67, a 0.68% increase. The 4-hour chart presents a crucial pivot point at $83.010, with immediate resistance levels at $84.980, $86.180, and $88.440. Support levels are currently pegged at $80.690, $79.270, and $77.430, indicating potential areas of price stabilization or reversal.

Technical indicators offer a bearish perspective, with the Relative Strength Index (RSI) at 43, suggesting bearish sentiment. The 50-Day Exponential Moving Average (50 EMA) stands at $83.560, above the current price, further supporting a short-term bearish trend.

A downward channel observed on the 4-hour chart, in conjunction with the 50 EMA and RSI, signals selling pressure. The overall trend for US Oil remains bearish as long as prices are subdued below the $83 mark.

Short-term forecasts indicate a potential challenge to the immediate support level of $80.690, with any substantial shift in market dynamics poised to influence the asset’s trajectory in the coming days.

Brent Oil Price Forecast

In today’s session, Brent oil nudged upwards, clocking in at $85.75, marking a modest 0.91% increment within the past 24 hours. The 4-hour chart delineates a bearish landscape as UK Oil hovers below the pivotal $87.08 mark. Resistance levels stand firm at $89.32, $91.25, and $93.65, while support levels are etched at $84.82, $83.54, and $82.01, demarcating critical junctures for potential reversals or breakouts.

The Relative Strength Index (RSI) languishes at 44, signaling a bearish sentiment that’s further compounded by the observed downward channel on the 4-hour chart. The 50-Day Exponential Moving Average (50 EMA) at $87.32, above the current price, reinforces the short-term bearish trend. Additionally, the Moving Average Convergence Divergence (MACD) exhibits a negative divergence of 0.68, underscoring the prevailing downward momentum.

In conclusion, the technical indicators and chart patterns collectively paint a bearish picture for UK Oil. The overall trend remains bearish as long as the price stays below the crucial $87.08 threshold. Short-term forecasts suggest that UK Oil may grapple with the immediate support level of $84.82 in the forthcoming sessions, with a keen eye on any potential shifts in market sentiment that could disrupt this trajectory.

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