Oil, Natural Gas, USD/CAD Technical Analysis Following US Sanctions on Russia

Crude oil prices continue to rally, with WTI crude oil (CL) reaching $78.50 per barrel and Brent oil (BCO) hitting $80 per barrel. This surge is driven by US sanctions on Russian oil producers, which are disrupting global supply chains.  The sanctions target oil traders, oil field service providers, Russian energy officials, and 183 vessels. These measures aim to restrict revenue generated from Russia’s oil exports, which could potentially fund its war against Ukraine. The sanctions introduce uncertainty to the supply outlook, introducing volatility to the crude prices. The combination of geopolitical tensions and strong demand bolsters oil’s bullish trend.

On the other hand, the US Dollar Index (DXY) continues to strengthen within its uptrend, reaching its highest level since November 2022. This strong momentum is driven by rising US Treasury yields. The 10-year yield has broken above 4.70%, paving the way for a potential rally toward 5%. Robust labor market data from December further bolsters the Federal Reserve’s steady interest rate stance. Nonfarm Payrolls (NFP) increased by 256K, exceeding expectations, while the unemployment rate declined to 4.1%. These developments highlight positive momentum for the US Dollar, supporting the ongoing rally in USD/CAD.

USD/CAD has extended its upward trajectory toward 1.4440 and remains strong. Robust US economic indicators, driven by the strength of the US Dollar, have supported the pair’s rally. However, the Canadian Dollar faces challenges due to concerns about potential US trade tariffs under the incoming administration. Despite these challenges, rising oil prices relieve the commodity-linked Canadian Dollar.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Breakout from Triangle

The daily chart for WTI crude oil shows that the price has attempted to break above the triangle resistance at $78. The price has broken above the 200-day SMA but has remained positive. However, the RSI has entered the overbought level, indicating that a price correction may be imminent. Nonetheless, the ongoing strength suggests that the price could break out of the triangle pattern and remain strong. The expected supply disruption due to sanctions on Russia may support the ongoing rally in the oil market.

Oil 4-Hour Chart – Positive Momentum

The 4-hour chart for WTI crude oil shows that the price has reached the upper resistance level at $78.40. It has pushed above this level and consolidated its gains. If the price corrects lower, the levels of $76 and $72.50 remain key support zones. Moreover, the RSI indicates that the price has entered the overbought region and suggests a potential correction.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Upward Trend

The daily chart for natural gas (NG) shows positive momentum following the breakout from the cup-and-handle pattern at $3. After this breakout, the price is trading within an ascending broadening wedge pattern. The move above $3.60 has opened the door to the $4.60-$4.70 range, where the price is expected to remain strong due to robust heating demand in Q1 2025. The RSI has rebounded from the mid-level, indicating that the price may continue accelerating.

Natural Gas 4-Hour Chart –Ascending Channel

The 4-hour chart shows the formation of an ascending channel and an ascending broadening wedge, indicating strong price volatility. The price has rebounded from the $3.35 support level and is consolidating above $4, reflecting strong natural gas demand. The price remains within a bullish trend and appears poised for further upside.

USD/CAD Technical Analysis

USD/CAD Daily – Price Consolidation

The daily chart shows that USD/CAD remains bullish, driven by US Dollar strength. The pair has been consolidating above the breakout level of the ascending channel at $1.4250 to $1.4270. After breaking above this pivotal zone, the overall direction for the pair remains upward. The RSI indicates that the pair is correcting lower from the overbought region but has found support. The 50-day SMA remains above the 200-day SMA, confirming a strong bullish trend.

USD/CAD 4-Hour Chart – Descending Broadening Wedge