Natural Gas and Oil Analysis: Rising Tensions and Powell’s Remarks Shape Today’s Markets

Key Insights

• Powell’s comments on bond yields and interest rate hikes affect the dollar.
• Natural Gas displays bearish trends, critical level set at $3.33.
• WTI Oil exhibits bullish tendencies with a pivotal break at $90.

Quick Fundamental Outlook

Oil prices surged in Asian trading on Friday, following the U.S. government’s decision to start replenishing its strategic oil reserves and due to worries over potential supply interruptions in the Middle East.

The U.S. Department of Energy (DOE) intends to procure 6 million barrels of oil, scheduled for delivery from December this year to January 2024. This move is part of the Biden administration’s efforts to restore the Strategic Petroleum Reserve (SPR), which had been significantly depleted, reaching its lowest volume in around 40 years. The depletion was a strategy to mitigate elevated gasoline prices triggered by the Russia-Ukraine conflict.

Oil prices also benefited from the weakened dollar, as recent remarks from Federal Reserve Chair Jerome Powell were perceived as slightly dovish. Although Powell hinted at a potential interest rate hike, he acknowledged that recent bond yield increases have considerably tightened financial conditions. Given Powell’s affirmation of the U.S. economy’s strength, many anticipate continued robust fuel demand in the U.S.

Natural Gas Price Forecast

Natural Gas (NG) has been trading at a price of $3.218, showing a slight uptick of +0.03 over the past 24 hours on a 4-hour chart timeframe. The critical price benchmarks to monitor are as follows: The pivot point rests at $3.3096. To the upside, immediate resistance is found at $3.4402, followed by subsequent resistance levels at $3.5811 and $3.6654.

Conversely, to the downside, immediate support lies at $3.1664, with further support at $3.0536 and then at $2.9158.

Additionally, the 50-Day Exponential Moving Average (EMA) is positioned at $3.3301. Given that the current price is below this EMA, it indicates a short-term bearish trend. The chart pattern displays a double bottom breakout at $3.300, while a bearish engulfing pattern spotted below the 50 EMA blue line lends support to the selling sentiment.

In conclusion, the overall trend for natural gas appears to be bearish below the $3.33 mark. If it sustains below this level, we can anticipate this bearish sentiment to continue in the short term. On the flip side, any break above $3.33 could change the directional bias.

WTI Oil Price Forecast

WTI Crude Oil (WTI) is priced at $89.47, reflecting a marginal drop of -0.04% in the past 24 hours. Analyzing the 4-hour chart, the pivot point stands at $87.83. To the upside, the immediate resistance level is $89.81, followed by other resistances at $91.67 and $93.46. On the downside, immediate support is located at $85.56, with deeper supports at $82.56 and $80.58.

Turning to technical indicators, the Relative Strength Index (RSI) clocks in at 61. This value above 50 indicates a prevailing bullish sentiment in the market. Moreover, the 50-day Exponential Moving Average (EMA) is recorded at $87.24. Since the current price stands above this EMA, it underscores a short-term bullish trend. The chart unveils an upward channel, suggesting that the current price movement is in a bullish trajectory.

In conclusion, the overall trend for USOIL is bullish. A decisive break above the $90 mark could further accelerate buying sentiment. In the short run, we can anticipate the asset to test the resistance at $91.67, provided the bullish momentum continues.

Brent Oil Price Forecast

Brent oil is presently trading at $93.45, showing a minimal dip of -0.02% over the last 24 hours. Based on the 4-hour chart, the pivot point is identified at $92.77. On the upside, traders should watch the immediate resistance level at $95.39, with further resistances at $97.32 and $98.93. Conversely, the initial support is positioned at $91.28, followed by subsequent supports at $89.41 and $87.56.

Considering technical indicators, the Relative Strength Index (RSI) stands at 66, indicating a prevalent bullish sentiment as it’s greater than 50 but hasn’t reached the overbought territory of 70 yet. The 50-day Exponential Moving Average (EMA) comes in at $90.29. As the current price exceeds this EMA, it emphasizes a short-term bullish tendency.

In conclusion, the prevailing trend for UKOIL remains bullish, especially if prices maintain above the $92.77 threshold. Over the short term, it’s likely that UKOIL will approach and possibly test the resistance level at $95.39 if the bullish momentum persists.

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