WTI Crude Faces Bearish Pressure, Natural Gas Holds Strong, USD/CAD Remains Bullish

WTI crude oil (CL) dropped to $68.39 on Monday and remains under bearish pressure. The decline was driven by fears that US President Donald Trump might impose an additional 10% tariff on China. These potential tariffs, aimed at China for allegedly allowing drug trafficking through Canada and Mexico, added uncertainty to the oil market. Concerns over strained US-China trade relations triggered strong selling pressure. Investors anticipated weaker global economic activity and lower oil demand, contributing to the price drop.

Trump had already imposed similar tariffs in early February, reducing the competitiveness of Chinese goods. If new tariffs are enacted, China’s manufacturing sector could slow down, directly impacting its oil consumption. China is the world’s largest oil importer, so any decline in its industrial activity would lower global oil demand. This expectation contributed to the decline in oil prices despite the stronger-than-expected Caixin Manufacturing PMI for February, which showed growth in China’s manufacturing sector.

Additionally, positive developments regarding the Russia-Ukraine peace talks further weighed on oil prices. UK Prime Minister Kier Starmer confirmed that European leaders, including Ukrainian President Zelenskyy, have started working on a structured peace plan. As a result, investors believe that a potential truce could lead to the removal of Western sanctions on Russia, increasing the global oil supply. Furthermore, the prospect of higher Russian oil exports and US-China trade tensions has created a bearish outlook for oil prices.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Bearish Pressure

The daily chart for WTI crude oil shows that oil prices remain under bearish pressure and have hit the strong support range of $68. The bearish pressure remains valid since the 50-day SMA remains below the 200-day SMA and the RSI is below the mid-level. A long-term support zone lies between $66 and $68, with a break below $66 likely to trigger a strong drop in oil prices. However, the bearish outlook remains intact if the price stays below $73.50.

Oil 4-Hour Chart – Bearish Pressure

The 4-hour chart for WTI crude oil shows that prices rebounded from the support at $68.39 and remain below $72.50. The RSI consolidation indicates a range-bound market for oil. A break above $72.50 will signal further upside in the oil market. However, a break below $66 will indicate further downside.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bullish Momentum

The daily chart for natural gas (NG) shows that the price forms an inverted head and shoulders pattern, with a correction to $3 leading to a strong rebound to $4.50. Prices are consolidating within an ascending channel.

The recent correction in natural gas has brought prices back to the 50-day SMA. Meanwhile, the RSI has reached the mid-level as the price tests the 50-day SMA. Despite the pullback, prices remain in a strong uptrend, indicating bullish price action.

Natural Gas 4-Hour Chart – Inverted Head & Shoulders

The consolidation in natural gas prices has resulted in an inverted head and shoulders pattern. Therefore, a break above $4.50 will trigger an upward move. Moreover, if the price remains above $3, the likelihood of an upward breakout remains high.

USD/CAD Technical Analysis

USD/CAD Daily – Positive Price Development

The daily chart for USD/CAD shows that the pair is trading upward after rebounding from support. The strong moves in USD/CAD after the Trump tariffs indicate high volatility in the energy market. As long as the price remains above the 200-day SMA, the likelihood of an upward trend remains strong.

USD/CAD 4-Hour Chart – Symmetrical Broadening Wedge

The 4-hour chart for USD/CAD shows that the pair is trading within an ascending broadening wedge pattern and remains bullish. The pair has increased as the US Dollar Index rebounded last week.