Oil, Natural Gas, USD/CAD Analysis As Inventory Data Fuels Bearish Sentiment

Oil prices remain under pressure as market participants weigh the impact of tariff uncertainties. Investors fear that trade restrictions will weaken global demand, limiting bullish momentum. Additionally, US President Donald Trump’s comments about speaking with OPEC to lower prices have placed the cartel in a difficult position. OPEC may now face increased pressure to adjust output policies, adding further uncertainty to the market.

Tariff threats create a complex situation for crude oil prices. The market anticipates that Trump will impose a 25% tariff on all goods from Canada and Mexico starting February 1st. This policy could significantly increase the cost of Brent crude oil (BCO), as Canada and Mexico are key suppliers to the US. In 2023, Canada sent 3.9 million barrels of oil per day to the US, accounting for half of total US imports. Moreover, Mexico contributed 733,000 barrels per day. Higher tariffs on crude and refined products, including gasoline, could increase transportation costs and impact the overall prices. WTI crude oil (CL) has been under pressure and has reached $72.50.

Meanwhile, rising crude inventories are adding further pressure to oil prices. US crude stocks grew by 3.463 million barrels, exceeding the expected 3.2 million-barrel build. The chart below illustrates the crude oil stock change, showing a positive shift in US crude stocks after nine consecutive weeks of declines. This shift in trend indicates an oversupply in the oil market. Moreover, the storage at Cushing, Oklahoma, increased by 0.326 million barrels. Furthermore, gasoline stocks surged by 2.957 million barrels, surpassing the expected 1.5 million barrel increase. Despite ongoing supply risks, these inventory builds reflect weak demand and impact prices.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Bearish Pressure

The daily chart for WTI crude oil shows the price trading under bearish pressure, breaking below the 200-day SMA. After this break, the price remains weak and is approaching the 50-day SMA. The RSI has also fallen below the mid-level, further reinforcing bearish pressure and supporting the continuation of the downtrend. A break below the 50-day SMA at $71.80 could extend the bearish momentum toward the red-dotted trend line around $68.

Oil 4-Hour Chart – Bearish Pressure

The 4-hour chart for WTI crude oil shows the price approaching the $72.50 zone, where it is consolidating. A break below this level could extend bearish pressure toward $71. The RSI is hovering near 40, suggesting further downside.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Key Support

The daily chart for natural gas (NG) shows that the price has dropped to the breakout level of $3, which is where the breakout from the inverted head and shoulders pattern initially began. Moreover, this level is a key support for natural gas to initiate the next move. As a result, natural gas prices may rebound from this level toward $4.50. Furthermore, the 50-day SMA remains above the 200-day SMA, further indicating a bullish trend.

Natural Gas 4-Hour Chart – Multiple Ascending Channels

The 4-hour chart for natural gas shows that prices have broken below ascending channel 2 and have reached the support of ascending channel 1 around $3. As a result, natural gas prices will likely rebound from this level and resume their upward movement. Furthermore, the RSI indicates oversold levels, which suggests the potential for a strong rally from this support zone.

USD/CAD Technical Analysis

USD/CAD Daily – Price Consolidation

The daily chart for USD/CAD shows that the price has broken out of the ascending channel and is consolidating below $1.4460. This consolidation strengthens the likelihood of an upward breakout in the pair. The consolidation reflects uncertainty stemming from Trump’s tariffs on Canada. The RSI rebounds from the mid-level, while the 50-day SMA remains above the 200-day SMA. These indicators suggest the potential for an upward breakout in the pair.

USD/CAD 4-Hour Chart – Symmetrical Broadening Wedge

The 4-hour chart for USD/CAD shows that the pair is trading within a symmetrical broadening wedge, which is exhibiting strong volatility. Moreover, the consolidations within this broadening wedge widen over time, further indicating increasing volatility. Consequently, this pattern enhances the likelihood of a strong upward rally if the price breaks above $1.4460.