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

Arslan Ali
Updated: Nov 21, 2023, 14:02 GMT+00:00

WTI and Brent Crude Oil face bearish trends amid OPEC+ deliberations and inventory reports. Key resistance and support levels await market reactions.

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

In this article:

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) Chart
Natural Gas (NG) Chart

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

WTI Crude Oil (WTI) Chart
WTI Crude Oil (WTI) Chart

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

Brent Oil Chart
Brent Oil Chart

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.

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About the Author

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.

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