Oil, Natural Gas, USD/CAD Technical Analysis: Impact of Seasonal Demand and Geopolitical Uncertainty

WTI crude oil (CL) reached its highest level since October 2024 and encountered resistance at $74.96. Investors are closely monitoring the impact of colder weather in the Northern Hemisphere, which is expected to increase heating oil demand and support prices. This cold weather will also boost natural gas (NG) prices in the first quarter 2025. Additionally, Beijing’s aggressive economic stimulus measures drive fuel consumption in the world’s largest crude importer. These measures include plans to inject funds through ultra-long-dated treasury bonds in 2025 to stimulate business investment and consumer spending. Renewed demand from China is set to bolster oil markets, while geopolitical developments in the Middle East further complicate supply forecasts.

On the other hand, the USD/CAD pair consolidates at a strong resistance level and corrects lower due to rising oil prices. Canada’s economy is closely tied to the energy market, with the country serving as the largest crude oil exporter to the United States. Additionally, political developments in Canada, including reports of Prime Minister Justin Trudeau’s potential resignation, are creating market uncertainty. These factors strengthen the Canadian Dollar (CAD), partially offsetting the US Dollar’s (USD) strength, supported by the Federal Reserve’s hawkish policy stance.

Moreover, the Federal Reserve’s cautious approach to monetary policy in 2025 adds complexity to the USD/CAD dynamic. Fed officials have indicated that rate reductions will proceed slower, with expectations of only two cuts in 2025. While this stance supports the USD, the CAD gains strength from domestic developments and rising oil prices. The interaction between a resilient CAD and a strong USD creates a narrow trading range. Shifts in oil market dynamics and central bank policies will likely drive further movements. Traders await the release of Nonfarm Payroll data on Friday for further directions in USD/CAD.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Bearish Hammer

The daily chart for WTI crude oil shows that the price has broken above the $72.50 level, initiating a strong rally toward the 200-day SMA. Significant resistance is observed around the 200-day SMA at $75.50. The emergence of a bearish hammer around this resistance highlights the potential for a price correction. However, a daily close above $75.50 would signal upward momentum toward $78. The RSI is nearing overbought, aligning with the 200-day SMA resistance zone.

Oil 4-Hour Chart – Positive Momentum

The 4-hour chart shows that oil prices found the resistance and correct lower. The strong resistance levels are pointed at $76 and $77.20. The nearest support lies at $72.50 levels. Moreover, the RSI has reached the overbought level, suggesting a potential short-term correction.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Cup and Handle

The daily chart for natural gas shows that the price has corrected lower from the resistance of an ascending broadening wedge. The correction to the wedge’s support level has initiated a strong rebound, pushing the price back above $3.60. This price action suggests that positive momentum is building for the next rally. The trend remains upward as long as the price remains above $2.80. Strong seasonal demand in January may further drive prices higher.

Natural Gas 4-Hour Chart –Ascending Channel

The 4-hour chart shows that the price is trading within an ascending channel, approaching the first support level at $3.35. A break below this level could lead natural gas prices toward $2.85, which may trigger a strong upside move. The RSI is turning upward from the bottom, indicating that the price may trend higher in the short term.

USD/CAD Technical Analysis

USD/CAD Daily – Price Correction

The daily chart for USD/CAD shows that the pair has broken out of the ascending channel and trended higher. It encountered resistance at $1.4460 and corrected lower. The pullback to the ascending channel’s support produced a strong rebound, highlighting the significance of this support region. Traders could view a price correction to the $1.4250–$1.4270 range as an opportunity for a rebound, potentially continuing the upward trend. The 50-day SMA and 200-day SMA are trending higher, indicating a strong bullish trend.

USD/CAD 4-Hour Chart – Descending Broadening Wedge

The 4-hour chart shows the price trades within an ascending channel, demonstrating positive momentum. The emergence of a bullish pattern within the ascending channel further highlights this momentum. The pair has formed a descending broadening wedge within the ascending channel, signalling a potential strong upward move. A break above $1.4460 would confirm the continuation of upward momentum in USD/CAD.