Natural Gas and Oil Analysis: Market Reacts to OPEC+ Cuts and China’s Demand

By:

Published: Dec 6, 2023, 13:08 GMT+00:00

Oil prices, affected by OPEC+ decisions and China's economic outlook, lead to a decrease in Brent crude and WTI, impacting the global oil market.

Oil prices drop amid OPEC+ cut extensions and China’s demand concerns.
Brent crude and WTI crude face declines to $76.57 and $71.74 respectively.
OPEC+ output cuts and Saudi price cuts reflect weak demand.
Natural Gas shows a modest increase, suggesting potential market shifts.
Putin’s OPEC+ discussions may further influence oil markets.

Quick Fundamental Outlook

Oil prices experienced a downturn on Wednesday, influenced by the uncertainty over OPEC+’s extended output cuts and a dimming demand outlook in China. Brent crude dropped to $76.57 a barrel, while U.S.

WTI crude slipped to $71.74. Despite OPEC+ agreeing on cuts of 2.2 million barrels per day for early 2024, market response remained tepid. Saudi Arabia’s recent cut in the official selling price for Asian markets hinted at sluggish demand, further dampened by Moody’s negative outlook on China’s economic health.

These factors, coupled with concerns over China’s fuel demand, are impacting the oil market, including Natural Gas, USOIL, and UKOIL. Russian President Putin’s discussions in the UAE and Saudi Arabia about OPEC+ collaboration might also influence future market movements.

Natural Gas Price Forecast

Natural Gas (NG) Chart

Natural Gas (NG) on December 6th presents a nuanced picture in the commodities market, with a slight uptick of 0.07%, pricing at $2.6840. The asset hovers near a pivotal $2.76 mark, setting the stage for upcoming resistance challenges at $2.85, $2.93, and a crucial level at $3.00.

In contrast, the immediate support lines up at $2.68, with additional layers at $2.62 and $2.55, offering fallback positions in case of a downturn. The Relative Strength Index (RSI) at 40 indicates a neutral momentum, neither overbought nor oversold, suggesting room for price movement in either direction.

The MACD shows a slight positive divergence, hinting at nascent bullish signals. Notably, NG is trading below the 50-day EMA of $2.81, which typically signals a bearish trend. However, the observed chart pattern indicates a potential shift in momentum.

The overall trend for NG leans bullish above the $2.68 mark, and the short-term outlook anticipates a test of the resistance levels in the coming days, contingent on market reactions to broader economic indicators.

WTI Oil Price Forecast

WTI Crude Oil (WTI) Chart

USOIL, on December 6, experienced a marginal decline of 0.29%, settling at $71.81. The oil market currently navigates a complex terrain marked by pivotal pricing levels and investor watchfulness.

The established pivot point stands at $73.00, with the pathway to growth hindered by resistance levels at $74.69, $76.52, and $78.44. Conversely, immediate support is found at $71.59, followed by stronger safety nets at $70.26 and $68.93.

The Relative Strength Index (RSI), hovering at 32, inches close to the oversold territory, possibly indicating an upcoming market correction or stabilization. The MACD, showing a reading of -0.1 against a signal line of -1.0300, suggests a bearish sentiment, albeit with a potential for reversal.

Notably, the price remains just below the 50-day EMA of $74.69, reinforcing a short-term bearish outlook. A notable upward trendline breakout at $73, which was once a support, has now turned into a resistance, highlighting a shift in market dynamics.

Given these observations, USOIL’s trend appears bearish below the $72.50 mark, with the potential to test resistances in the near term if market sentiment shifts.

Brent Oil Price Forecast

Brent Oil Chart

On December 6, UKOIL observed a slight decline, registering a 0.34% decrease to $76.74. This subtle movement paints a picture of a market at a crossroads. The commodity is currently trading around a pivot point of $78.01, with looming resistance levels at $79.07, $80.12, and an upper threshold of $81.50.

Should the momentum reverse, UKOIL finds immediate support at $76.65, with further safety nets at $75.01 and $74.02. The Relative Strength Index (RSI) is at 31, hovering near oversold conditions, which could indicate a potential upward correction.

However, the MACD shows a slight negative reading of -0.1 against its signal line, underlining the prevailing bearish sentiment. Significantly, the price is just below the 50-day EMA of $79.57, suggesting a short-term bearish outlook. A key observation is the upward trendline breakout at $78, now acting as resistance.

This shift in dynamics indicates a bearish trend below $77, with the potential for UKOIL to test higher resistance levels in the short term if market conditions shift.

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

About the Author

Arslan Aliauthor

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.