Natural Gas and Oil Analysis: Rate Cut Pause and Red Sea Tensions Stir Market

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Updated: Feb 23, 2024, 11:07 GMT+00:00

Key Points:

Fed's hesitation on rate cuts nudges Brent and WTI crude prices down by 0.3%.
Waller's call for rate cut delay weighs on oil, questioning inflation's impact on demand.
Red Sea tensions briefly lift oil prices, highlighting global events' sway on energy markets.

Fed’s Rate Cut Pause Signals Dip in Oil Prices Amid Global Tensions

Oil prices experienced a slight decline on Friday, with Brent crude dropping to around $83.50 and WTI crude to $78.40, each by 0.3%, following comments from Fed Governor Christopher Waller.

Waller advocated for a pause in interest rate cuts to assess whether the inflation uptick is transient or a more sustained obstacle to economic stability. Persistent high rates tend to dampen economic growth and, consequently, oil demand.

Despite these sentiments suggesting a cautious approach to monetary easing, oil prices had previously seen an uptick due to escalating tensions in the Red Sea. The situation underscores the fragile interplay between global events and commodity prices, impacting the analysis of both natural gas and oil markets.

Natural Gas Price Forecast

Natural Gas Price Chart

Natural Gas (NG) futures face downward pressure, currently at $1.7810, marking a decline of 1.60%. The day’s trading positions the pivot point at $1.8254. Should NG ascend, it would encounter resistance at $1.8899, $1.9544, and a more substantial barrier at $2.0839.

On the descent, immediate support lies at $1.7394, with further potential floors at $1.6117 and $1.5002. The 50-day EMA at $1.7641 suggests near-term support, while the 200-day EMA at $2.0603 indicates a longer-term downward trend.

The overall trajectory for NG is bearish as long as it stays below the pivot of $1.8254, pointing to a market that favors sellers over buyers at this juncture.

WTI Oil Price Forecast

WTI Price Chart

USOIL is presently trading at $78.21, showing a modest downturn of 0.12% within the last 24 hours. The asset is hovering just below its pivot point of $78.53. Should a rebound occur, USOIL may encounter successive resistance levels at $79.27, $80.10, and $81.08.

Alternatively, support forms at lower thresholds of $77.26, $76.31, and $75.45, which could provide a floor to further dips. The 50-day EMA at $77.38 and the 200-day EMA at $75.74 both signal a bullish undertone for the commodity.

Concluding, USOIL’s outlook remains bullish as long as prices maintain above the $77.26 support level, suggesting an underlying upward potential in the market.

Brent Oil Price Forecast

UKOIL Price Chart

UK OIL, the benchmark for Brent crude, is currently trading at $83.30, reflecting a marginal 24-hour decrease of 0.13%. The commodity’s technical chart shows a pivot point at $83.95, indicating the balance level for the session.

If bullish momentum prevails, UKOIL may face resistance at $85.18, followed by $85.97 and $86.83. Conversely, supports are formed at $82.27, $80.68, and $79.31, which could stabilize price declines. The 50-day EMA at $82.51 and the 200-day EMA at $80.86 both suggest underlying bullish sentiment.

In conclusion, the trend for UKOIL appears bullish as long as the price remains above the $82.51 mark, hinting at continued strength in the energy sector.

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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.