Natural Gas and Oil Analysis: Energy Markets Navigate OPEC+ Decisions and Inventory Trends

Key Insights

• Oil prices face a reversal, dropping amid investor caution ahead of the OPEC+ meeting, possibly discussing deeper supply cuts.
• OPEC+ sources hint at extended or intensified cuts, affecting Brent and WTI crude prices.
• High U.S. crude output and demand concerns contribute to a 16% fall in oil prices since September.
• Upcoming U.S. inventory reports are expected to show increased crude and gasoline stocks.

Quick Fundamental Outlook

Oil prices witnessed a downturn on Tuesday, erasing recent gains, amidst investor caution ahead of an OPEC+ meeting. This meeting, scheduled for Sunday, might see discussions on intensifying supply cuts due to global economic deceleration.

After a 2% rise on Monday following OPEC+ sources hinting at potential additional cuts, Brent crude dropped by 0.4% to $81.97 a barrel, and U.S. West Texas Intermediate (WTI) crude fell 0.5% to $77.47. Speculations are rife about OPEC+ possibly extending or deepening supply reductions into the next year, with some experts suggesting a possibility of a more significant cut.

This period has seen oil prices drop approximately 16% since late September, influenced by high U.S. crude output and concerns over demand and economic slowdown.

Upcoming U.S. inventory reports are expected to indicate a rise in crude and gasoline stocks, adding to the market’s anticipatory sentiment. This scenario presents a bearish outlook for both USOIL and UKOIL, while potentially impacting Natural Gas prices as the energy sector reacts to these developments.

Natural Gas Price Forecast

Natural Gas (NG) exhibits a slight downtrend, currently trading at $3.015, down by 0.02%. The 4-hour chart analysis reveals a pivot point at $3.22, with immediate resistance levels at $3.37 and $3.50. Conversely, support levels are established at $3.00, $2.91, and $2.80, which could play a crucial role in preventing further declines.

The Relative Strength Index (RSI) stands at 37, pointing towards a bearish sentiment, as it is below the neutral 50 mark. The MACD’s value of -0.06 below the signal line also supports a bearish outlook, suggesting downward momentum.

The 50-Day Exponential Moving Average (EMA) at $3.18 indicates that the current price is below this critical level, reinforcing the bearish trend. The observed downward channel in the chart patterns further implies a continuing downtrend.

Given these indicators, the overall trend for Natural Gas appears bearish, especially if it remains below the $3.15 mark. The asset is likely to test the immediate resistance levels, but the prevailing sentiment suggests caution, as a break below the current support could lead to further downside in the short term.

WTI Oil Price Forecast

In the oil markets, US Oil exhibits a subtle downtrend, with a 0.18% decrease to $77.51. The 4-hour chart reveals a critical pivot at $79.44, suggesting a key decision point for future price actions.

Resistance is poised at $81.15 and $83.40, while strong supports are set at $75.46, $73.89, and $72.00.The Relative Strength Index (RSI) at 56 indicates a slightly bullish sentiment, yet remains clear of overbought conditions. Interestingly, the price hovers just above the 50-Day Exponential Moving Average (EMA) of $77.06, indicating a tenuous bullish trend.

However, the chart patterns show a downward channel, hinting at a possible downtrend. The overall market trend for US Oil leans bullish, particularly if it sustains above the $77.08 level.

In the short term, the market may test the resistance at $81.15, but traders should stay vigilant for any signs of reversal indicated by the observed downward channel.

Brent Oil Price Forecast

UK Oil is currently witnessing a marginal downtrend, with a slight decrease of 0.09% to $81.94. Analyzing the 4-hour chart, the pivot point is identified at $83.52, indicating a critical juncture for the asset’s future movement. The immediate resistance levels are set at $85.28 and $87.95, posing potential challenges for further upward movement.

Conversely, support levels are positioned at $79.28, $77.15, and $75.27, providing a buffer against further declines. The Relative Strength Index (RSI) stands at 56, suggesting a mild bullish inclination.  Additionally, the current price hovers around the 50-Day Exponential Moving Average (EMA) of $81.46, hinting at a balanced market trend.

However, the observed downward channel in the chart patterns suggests a potential bearish trend, warranting caution. The overall trend for UK Oil appears bullish above the $81.40 mark, suggesting a potential test of the resistance at $85.28 in the near term, provided it can sustain the current support levels and overcome the bearish signals indicated by the downward channel.

For a look at all of today’s economic events, check out our economic calendar.