Oil, Natural Gas, US Dollar Technical Analysis: Energy Markets React to Tariff Tensions

US tariffs on imports from Canada, Mexico, and China will take effect on February 4, with Canadian energy facing a 10% tariff. This decision has influenced oil markets, initially pushing WTI crude oil prices to $75. However, ongoing uncertainty and the expected trade war have pulled WTI crude oil (CL) back to $72.50 on Monday. Canada supplies a significant portion of US crude oil, primarily heavy crude, which many refineries in the Midwest rely on. The tariff could increase feedstock costs for refiners, eventually leading to higher fuel prices for consumers.

Canadian oil producers may struggle more than US refiners because they have limited export alternatives. While Canada does have the Trans Mountain pipeline, which allows for some crude exports to the West Coast, the current infrastructure is insufficient to offset the impact of US tariffs. This lack of alternative buyers means Canadian oil producers will face tighter margins and potential economic strain. On the other hand, US refiners can still source oil from other countries or pass costs to consumers. This dynamic puts Canadian oil producers at a more significant disadvantage, making their exports less competitive.

These tariffs could impact the broader commodities market. Trade tensions generally weaken investor confidence and raise concerns about global economic growth, which could lead to volatility in oil prices. Moreover, a stronger US dollar could also limit gains in oil and other commodities, making them more expensive for foreign buyers. Natural gas (NG) prices have also shown intense volatility due to the ongoing uncertainty in the energy market.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Bearish Pressure

The daily chart for WTI crude oil shows that the price remains under bearish pressure and continues to decline. Strong support is around $68; a break below this level could trigger a long-term downtrend. The RSI has dropped below the mid-level, further reinforcing the bearish outlook. The 50-day SMA is below the 200-day SMA, confirming the prevailing bearish trend.

Oil 4-Hour Chart – Strong Volatility

The 4-hour chart for WTI crude oil shows that the price fluctuates above the $72.50 level but remains weak. A break below this level could push prices toward $71. The price hovers around the black-dotted trendline, indicating a bearish outlook.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Daily Support

The daily chart for natural gas prices shows that prices fluctuate above the key $3 level, maintaining positive momentum. The 50-day SMA remains above the 200-day SMA, indicating a bullish trend. The overall price structure remains bullish as long as the price stays above the 200-day SMA at $2.70. A break above the $3.60 level could trigger the next upward move.

Natural Gas 4-Hour Chart – Ascending Channels

The 4-hour chart for natural gas shows that the price rebounds from the support level of the ascending channel at $3. This rebound stems from oversold market conditions, indicating bullish momentum. A break above the mid-level of the ascending channel at $3.60 could initiate the next upward move toward $4.60.

US Dollar Technical Analysis

US Dollar Daily – Price Correction

The daily chart for the US Dollar Index shows it surged at Monday’s opening after hitting the support level of 107 but reversed lower on intense volatility. It shows positive momentum after breaking above the 105.60 and 107 levels. President Trump’s policies will likely strengthen the US dollar further in the short term. However, strong volatility in financial markets could lead to wide price swings in the US Dollar Index.

US Dollar 4-Hour – Ascending Broadening Wedge

The 4-hour chart for the US Dollar Index shows that the price trades within an ascending broadening wedge pattern and has rebounded higher from its support level. The formation of an inverted head-and-shoulders pattern strengthens the bullish outlook. However, the strong move on Monday indicates wide price fluctuations driven by President Trump’s policies.