Oil and Natural Gas Technical Analysis: Bullish Patterns and Market Volatility

WTI crude oil (CL) pushes above $70 and approaches the resistance zone at $72 during holiday trading. The energy market faces mixed signals. While stimulus in China boosts crude consumption, geopolitical tensions and potential shifts in energy policies contribute to volatility. Despite recent gains in December, crude oil recorded a slight annual loss in 2024.

On the other hand, natural gas (NG) prices remain volatile as the market balances increased winter demand against ample storage levels. The U.S. Energy Information Administration (EIA) reports 3,529 Bcf in working gas storage, 166 Bcf above the five-year average, as shown in the chart below. This surplus offers a cushion, but the potential for record heating demand keeps the market on edge. A net decrease of 93 Bcf from the previous week highlights the typical seasonal drawdowns. While storage levels appear comfortable, they do not fully alleviate concerns about winter supply.

Weather forecasts significantly influence natural gas market movements. The cold weather forecast for January has driven a rally in natural gas prices due to strong demand. However, prices have pulled back from resistance due to profit-taking and are now positioning for the next move higher. The interaction between weather conditions and storage levels is expected to drive near-term price trends.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – Breakout from Triangle

The daily chart for WTI crude oil shows strength as the price approaches the key level of $72.50. A breakout above this level could push oil prices out of the neutral zone. The mid-level RSI supports the price and is trading above the 50-day SMA, indicating bullish pressure. However, the broader-term pattern suggests that the price remains within a neutral trading range.

WTI Oil 4-Hour Chart – Positive Momentum

The 4-hour chart for WTI crude shows bullish price action, highlighting key resistance between $71.40 and $72.50. The price has reached this resistance zone and is awaiting its next direction. This week’s crude oil inventory data will likely provide further guidance for the oil market.

Brent Oil (BCO) Technical Analysis

Brent Oil Daily – Approaches Resistance

Brent crude oil (BCO) also exhibits positive price action during the New Year 2025, with the price approaching the strong resistance at $76. The black trendline defines this resistance, and a breakout above this level could trigger positive momentum in the oil market. The RSI is currently at 62 and rising from the mid-level, indicating further upside potential in the oil market.

Brent Oil 4-Hour Chart – Consolidation

The 4-hour chart for Brent crude oil shows the price consolidating within a neutral zone. The price is approaching the resistance level at $76 and awaiting its next direction. A breakout above $76 would exit the neutral zone and initiate positive momentum.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Cup and Handle

The daily chart for natural gas shows bullish price action forming through a cup-and-handle pattern, initiating a strong upward move. This rally narrowly missed the resistance at $4.40 within the ascending broadening wedge and began to drop from $4.20. However, this price drop has not altered the overall bullish momentum in natural gas.

The first support at $3.60 has been reached, and the price is now seeking the next support at $3.45. As long as the price remains above $2.80, the bullish trend remains intact.

Natural Gas 4-Hour Chart –Ascending Broadening Wedge

The 4-hour chart for natural gas shows that the price is trading within an ascending channel and has formed an ascending broadening wedge within this channel. The support for the ascending channel lies between $2.80 and $3.00. As long as the price remains above this level, natural gas prices are likely to continue trending higher.