Natural Gas and Oil Analysis: US Inflation Expectations Cool as Oil Prices Slide

Key Insights

• US stocks rally for seven days, longest in two years amidst falling crude prices.
• US crude dips 15%, pulling gas prices to a seven-month low.
• Two-year inflation expectation drops to 2.2% amid market shifts.
• Fed Chair speech awaited; bond markets stabilize with successful Treasury auctions.
• Economic growth projected to slow, Q4 forecast at 1.45%.

Quick Fundamental Outlook

The U.S. stock market has achieved its longest winning streak in two years, with seven consecutive days of gains. This rally comes amid a significant drop in crude oil prices, triggered by a combination of factors including global demand concerns, a record high in US production, and diminished supply worries from the Gaza conflict, resulting in a more than 15% decrease in US crude prices in under three weeks.

This decline has brought US gas prices to their lowest since March. The dip in energy prices, alongside a cooling labor market and increased credit card delinquencies, has led to a reduction in two-year US inflation expectations to 2.2%.

The situation has also eased bond market tensions, evidenced by a successful 3-year Treasury auction, with a $40 billion 10-year note auction forthcoming. This economic landscape provides a backdrop for Federal Reserve Chair Jerome Powell’s upcoming speech, as well as appearances by other major central bank leaders.

Despite a projected economic slowdown, as indicated by the Atlanta Fed’s model forecasting a drop to 1.45% annualized growth in Q4 from 3% in Q3, Fed officials have given varied opinions on future policy actions.

The impact on natural gas (NG), U.S. oil (USOIL), and U.K. oil (UKOIL) is multifaceted. Lower crude prices have directly affected USOIL and UKOIL, indicating a potential easing of inflation pressures which can influence energy sector investment and consumer costs.

The overall economic sentiment from these trends could also affect NG prices, as energy demand and inflation expectations often correlate with natural gas market dynamics.

Natural Gas Price Forecast

Natural Gas (NG): In the latest Daily Technical Outlook for Natural Gas on November 8th, prices have dipped to $3.225, a 1.56% decrease within the last 24 hours. The market is navigating a bearish phase with the pivot point marked at $3.34.

WTI Oil Price Forecast

USOIL’s technical landscape on November 8th reflects a subtle decline, as prices eased to $76.76, a 0.42% fall on a 4-hour chart scale. The commodity currently trades below the pivotal $77.61 mark, suggesting a bearish bias. Resistance levels are staged at $79.44, $80.89, and a more distant $83.20, while support seems firm at $75.38, followed by $74.07 and $72.67.

The RSI, deeply entrenched at 25, signals an oversold territory, often a precursor to potential price stabilization or a corrective rally. The MACD further corroborates the bearish trend, trailing below the signal line. Price action under the 50 EMA of $81.16 confirms the short-term bearish trend.

A formed downward channel and candle closes under the pivot point reinforce the selling momentum. The overall trend skews bearish below $77.60, yet a move above this level could alter the forecast. For now, traders might anticipate USOIL to challenge immediate support levels unless a price correction ensues.

Brent Oil Price Forecast

UKOIL’s trading session on November 8th sees the benchmark hovering at $81.00, marking a modest downtick of 0.49% within the 4-hour chart frame. The asset lingers below the pivotal threshold of $82.08, with an immediate ceiling at $83.80, and further resistances awaiting at $85.30 and $87.61.

Conversely, supports form a cushion at $80.53, descending to $79.41 and $77.53. The RSI indicates an oversold condition at a value of 26, hinting at a potential relief rally or a bottoming out phase. The MACD’s posture, below the signal line, aligns with a bearish narrative.

Price trajectories beneath the 50 EMA of $86.28 add weight to the short-term downward trend. The chart’s evident downward channel, coupled with candlestick patterns closing under the pivot point, underscores the prevailing selling pressure.

The overall sentiment is bearish sub-$82, with a reversal above this juncture potentially shifting the dynamics. The immediate trajectory suggests UKOIL may test its support zones, barring any bullish retracements.

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