Natural Gas and Oil Analysis: Rising Oil Prices on OPEC+ Output Cuts, but Oversupply Concerns Loom

By:

Published: Dec 8, 2023, 12:39 GMT+00:00

Despite a recovery in oil prices on OPEC+ output cut calls, persistent oversupply and weak Chinese demand continue to cloud the market outlook.

Natural Gas and Oil Analysis: Rising Oil Prices on OPEC+ Output Cuts, but Oversupply Concerns Loom

Oil benchmarks recover after Saudi-Russia call for OPEC+ output cuts, but concerns of oversupply and weak demand persist.
Brent and WTI crude futures show modest gains, yet contango market structure indicates a global supply glut.
Natural Gas price sees a 1.74% rise, but remains in bearish territory below key resistance levels.

Quick Fundamental Outlook

Oil benchmarks are poised for their seventh consecutive weekly loss due to concerns about a global supply glut and diminished demand in China. However, Friday saw a recovery in prices after Saudi Arabia and Russia advocated for more OPEC+ members to support output cuts.

OPEC+ has agreed to a 2.2 million barrels per day cut for early next year, but doubts persist about adherence to these cuts. This week, Brent and WTI crude are expected to decline by 3.9% and 4%, respectively. Chinese crude oil imports fell by 9% in November, signaling weak demand, while U.S. output stays near record highs.

The market anticipates the U.S. jobs report for further clues on monetary policy, potentially influencing the Federal Reserve’s rate decisions, which could impact Natural Gas, USOIL, and UKOIL markets.

Natural Gas Price Forecast

Natural Gas (NG) Chart

Natural Gas (NG) has witnessed a significant uptick of 1.74%, elevating its market price to $2.5740. This movement reflects the volatile energy sector, with a pivot point established at $2.48. Resistance points for NG are charted at $2.70, $2.83, and the more distant $3.03, representing key thresholds for potential bullish advancements.

Support levels are anchored at $2.34, with additional safety nets at $2.20 and $2.09, which could stabilize the market in case of downward pressure. The Relative Strength Index (RSI) is hovering around 28, indicating an oversold market, which could signal a potential upswing.

The Moving Average Convergence Divergence (MACD) shows a slight positive value of 0.0069 against a signal line of -0.0493, suggesting emerging bullish sentiments.

However, the price remains below the 50-day Exponential Moving Average (EMA) of $3.00, typically a bearish indicator. The appearance of Doji and Spinning Top candlestick patterns points to a neutral market bias, indicating indecision among traders.

The overall trend for Natural Gas is bearish below the $2.70 mark, but there is a possibility for the asset to test higher resistance levels in the upcoming trading sessions, depending on broader market dynamics and energy demands.

WTI Oil Price Forecast

WTI Crude Oil (WTI) Chart

USOIL, the benchmark for U.S. crude oil, has shown a notable uptick in its market trajectory, registering a 1.64% rise to reach $70.47. The oil market currently navigates a complex landscape, with its pivot point established at $69.38.

It faces resistance at higher levels, starting at $72.03, with significant barriers at $74.08 and $76.53. On the flip side, support is found at $67.13, extending to $65.13 and $63.73.

The Relative Strength Index (RSI) at 40 suggests a potential for upward movement, as it is below the overbought threshold. However, the price is currently below the 50-day Exponential Moving Average (EMA) of $72.89, which typically signals a bearish trend.

Given these factors, the outlook for USOIL appears bearish below the critical level of $72. However, the market might test resistances in the near term if conditions become favorable, influenced by global economic factors and production dynamics.

Brent Oil Price Forecast

Brent Oil Chart

UKOIL, the benchmark for Brent crude oil, is showing renewed vigor in the market with a 1.56% increase, positioning itself at $75.45. The oil landscape is witnessing intriguing dynamics, with the current pivot point at $74.07. Resistance levels are arrayed at $76.74, $78.58, and $81.95, marking potential zones of contention for price movements.

Support levels are identified at $72.09, followed by further bases at $70.24 and $68.51, which could offer stability in case of a downward price correction. The Relative Strength Index (RSI) stands at 41, hinting at potential growth without immediate overbought concerns. However, the current price remains below the 50-day Exponential Moving Average (EMA) of $77.77, which traditionally suggests a bearish outlook.

The market may encounter bearish trends below the critical level of $76.75, but there exists potential for testing higher resistances in the near term, influenced by global economic and geopolitical factors.

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.