Natural Gas and Oil Forecast: $9M Inventory Draw – WTI Break $66?

Oil and Gas Forecast: Geopolitical Premium Fades as Supply Concerns Come Back to the Fore

Crude prices have taken a bit of a breather as the heat seems to be coming off of geopolitical tensions, at least enough so as to take some of the risk premium out of the market. WTI is currently trading around $65.50-$66.00 per barrel – that’s a fall of about 1-1.5% – while Brent is hovering around $70.40-$70.88. This appears to be a reflection of a broader re-evaluation of just how much risk is still out there in the supply side of things.

The latest U.S. inventory numbers showed a 9 million barrel draw down, which was just enough to nudge stocks up to around 419.8 million barrels – which in turn helped to support prices back in February.

But while that’s been a positive factor, it’s being somewhat offset by the increasing supply of non-OPEC oil and the steady production forecasts for the U.S. for next year. OPEC+ are sticking to their guns and keeping output under tight discipline for the time being, but demand forecasts are all over the place – we’re talking anything from a 850,000 barrel to 1.4 million barrels per day in growth estimates.

The reality is it’s the balance between easing geopolitical worries and all these surplus concerns that’s really going to be driving oil prices in the short term.

Natural Gas Holds Above $3.18 – $3.32 Breakout in Focus

Natural Gas futures are stuck just below $3.18 on the 4-hour chart, hanging on by a thread after a bounce from the $3.18 – $3.32 level. Following that sharp rally from near $1.00, we’ve got a consolidation range forming between $3.00–$3.33 with multiple tiny-bodied candles showing a pretty even split between buyers and sellers.

The 50-period moving average around $3.15 is starting to flatten out, while the 200-period MA near $2.60 continues to slope upwards, supporting the uptrend. The short-term picture is a bit more mixed – the blue horizontal zone around $3.05–$3.10 looks like short-term demand, though. A close above $3.32 would unlock the path to $3.91, while a drop below $3.05 could expose $2.66 (0.382 Fib).

Trade idea: If we do see a close above $3.32, consider buying targeting $3.90 with a stop loss below $3.05.

WTI Oil Tests $65.80 Resistance as Descending Trendline Caps Upside

WTI crude is currently hovering just below $65.69 on the 4-hour chart, having a pretty tough time making it past the 0.236 Fibonacci level at $65.78 and a pretty stubborn descending trendline stemming from the higher $66.99 peak. But the candlesticks lately have been showing us a lot of indecision, with tiny bodies and upper wicks near $66.00–$66.80, that suggests the rally from $61.87 is starting to take a breather.

The price is still safely above the 50-period moving average at $63.82, with the 200-period MA at $62.94 providing some extra support for the upward channel. But we do need to keep an eye on the key support levels at $65.04 (0.382 Fib), $64.43 (0.5 Fib), and $63.83 (0.618 Fib).

If we do see a break below $65.04 things could start to shift pretty sharply towards the mid-channel zone. On the other hand, if bulls can reclaim $66.00, a retest of $67.00 becomes a lot more likely.

Trade idea: Consider selling if price breaks down below $65.00, with a stop loss above $66.80, targeting $64.40.

Brent Crude Tests $70.22 Support After Rejection at $72.31

Brent crude is currently stuck in the low $70s on the 4-hour chart, having been unable to hold onto gains above $72.31. We’re seeing a lot of candles near the 0.236 Fibonacci level at $71.02 printing with upper wicks, which tells us there’s selling pressure at resistance. Price is now testing the 0.382 Fibonacci level at $70.22 – a key short-term support that we’ll be keeping a very close eye on.

If that level does break, the next targets for a drop will be $69.57 (0.5 Fib) and $68.93 (0.618 Fib). The rising trendline from $66.84 remains intact, while the 50-period moving average near $68.90 continues to provide a degree of support for the broader trend. If we do see a rebound above $71.00, the focus will shift back towards $72.31.

Trade idea: Consider selling if price breaks down below $70.20, targeting $69.60 with a stop loss above $71.20.