Natural Gas and Oil Analysis: Market Weighs Geopolitical Tensions Against Demand Forecasts

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Published: Dec 12, 2023, 12:08 GMT+00:00

Despite heightened Middle East tensions from a Houthi attack, oil prices, with Brent at $75.71, remain under pressure due to demand uncertainties.

Key Insights

Oil prices dip with Brent at $75.71 and WTI at $71.13 amid supply and demand concerns.
Houthi attack on tanker raises Middle East safety concerns, yet oil prices remain subdued.
Market watches U.S. CPI data and Fed meeting for potential impacts on oil and gas.
Global oil demand growth expected to slow, casting a shadow over future market trends.
Upcoming U.S. inventory reports could further influence the direction of oil and natural gas prices.

Quick Fundamental Outlook

Oil prices fell on Tuesday, with Brent crude dropping to $75.71 per barrel and West Texas Intermediate slipping to $71.13, as concerns over excess supply and slowing demand outweighed escalating risks in the Middle East.

The Iran-aligned Houthi group’s attack on a commercial chemical tanker in Yemen heightened safety concerns but didn’t significantly bolster oil prices. Market sentiment remains cautious ahead of the U.S. CPI data and Federal Open Markets Committee meeting.

Additionally, global oil demand growth is expected to slow in 2024, and recent OPEC+ supply limits have underwhelmed the market. Upcoming U.S. inventory reports are also in focus. This cautious sentiment impacts USOIL, UKOIL, and Natural Gas markets.

Natural Gas Price Forecast

Natural Gas Chart

Natural Gas (NG), a key commodity in the energy sector, is currently priced at $2.40, reflecting the market’s cautious sentiment. With its pivot point at $2.25, Natural Gas faces immediate resistance at $2.52, and should buying pressure increase, further resistance levels at $2.69 and $2.94 loom ahead.

Conversely, support levels are established at $2.06 and extend to $1.65. The asset’s Relative Strength Index (RSI) sits at 21, indicating an oversold condition, while the MACD barely crosses above its signal line, suggesting a possible shift in momentum.

A hammer candlestick pattern just above the $2.25 level signals a weakening in the selling trend, potentially setting the stage for a bullish reversal above this mark. As such, Natural Gas could be gearing up to test higher resistances, especially if it sustains above the $2.25 threshold.

WTI Oil Price Forecast

USOIL Chart

USOIL, a key indicator of global economic health, has experienced a marginal uptick to $71.45, showing a 0.09% increase on December 12. Currently, it navigates around the pivot point of $70.65, with immediate resistance awaiting at $74.11 and further barriers at $75.91 and $79.58.

The support levels are notably placed at $68.50, with subsequent safety nets at $66.80 and $64.54. The Relative Strength Index (RSI) at a balanced 50 and a MACD of 0.23 suggest a market in equilibrium.

However, the formation of Doji and Spinning top candles below the 50 EMA of $72.29 signals potential weakening of the uptrend. As such, USOIL’s trend appears bearish below $72.25, with the market closely watching for any move above this threshold to reassess the outlook.

Brent Oil Price Forecast

UKOIL Chart

UKOIL, a crucial gauge for global energy markets, modestly ascended to $76.15, marking a slight rise of 0.05% as of December 12. This subtle increase places it near a pivot point of $76.59, with eyes set on immediate resistances at $78.73, $82.00, and $84.51.

On the flip side, support is established at $74.02, with further cushions at $72.14 and $70.19. The Relative Strength Index (RSI) lingers at 49, teetering on the edge of bearish territory, while the MACD at 0.22 marginally above its signal line hints at a potential uptrend.

However, the formation of Doji and Spinning top candles beneath the 50 EMA level of $77.09 and the recent transformation of the $76.60 level from support to resistance suggest potential weakness in the uptrend.

Consequently, UKOIL currently shows a bearish inclination below $76.60, with the market closely observing whether it can break above this level for a shift in sentiment.

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About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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