Natural Gas and Oil Forecast: Brent Eyes $119 While NatGas Bears Defend the $2.83 Ceiling

Market Overview

Geopolitical tensions stemming from the ongoing US-Iran conflict and the near-constant bottleneck in the Strait of Hormuz continue to be the major drivers of the crude fundamentals. A lot of oil is off the market right now, thanks to production being shut in across Gulf producers – Saudi Arabia, Iraq, and the UAE are all impacted – in addition to the logistical headaches caused by tanker traffic being disrupted and having to re route shipments.

Brent is getting hit pretty hard because it relies so heavily on Middle Eastern oil, and the costs of shipping it are going through the roof. And to add another layer of uncertainty to the mix, there’s talk of the UAE considering leaving OPEC – that’s not helping with discipline within the cartel, even as OPEC+ tries to navigate all these disruptions. As for next year’s global demand forecasts, the IEA is definitely tempering its expectations, because of how much of an economic drag this conflict has been, and they think it might even contract.

WTI is looking pretty good at the moment, thanks to the US seeing record production and having some seriously robust domestic oil inventories. But despite all that, the market is still being influenced by the SPR releases and just how tight things are right now. In gas, US fundamentals are still pretty soft in the short term. We just got a report from the EIA that showed a nearly 79 billion-cubic-foot storage build for the week ending April 24, which lifted the total to 2,142 billion cubic feet well above the five year average.

And all that’s doing is making it clear that we’re just swimming in supply at the moment, with high production, nice spring weather and basically no heating demand making things pretty well stocked for injection season.

Longer term though, the demand for LNG feedgas and trends in power sector usage – with all the data centers that are springing up – do offer a bit of reassurance, but things are patchy in Europe with their storage being replenished in fits and starts.

Natural Gas Price Analysis: Bearish Channel Caps Recovery Near $2.81

Natural gas is trading at around $2.81 and is trying it’s best to claw its way back up within a fairly clear descending channel. Price has been repeatedly kept in check near the $2.80–$2.83 resistance zone which just happens to line up with the 50 EMA and channel resistance – and that in itself is a pretty clear indication that there is some big selling pressure here. The recent bounce from $2.60 did look a little bit promising but overall the structure of the market still looks pretty bearish.

The 200 EMA has been sitting just above $2.93 for a while now and is still acting as a bit of a lid on any sustained upside moves. RSI has recovered a bit and taken the fight back to 60, which is a good sign – but it’s still a bit early to throw in the towel for the bears just yet.

If the price fails to get past $2.83 once again then its dollar for dollar towards $2.68 and $2.60 for me. A break above $2.93 would be a big deal, though – if that happens then and only then can we even start to think about shifting the conversation to the whole tide turning and targeting $3.05.

WTI Crude Oil Forecast: Bullish Channel Eyes Break Above $110 Resistance

WTI oil is hovering around $106.10 still holding a fairly clear ascending channel on the 4 hour chart. Price recently backed off from the $110.80 resistance, but its still managing to stay above $103.30 which has transformed into a solid support zone. You can clearly see that price is building higher highs and higher lows which is a big tick in the box for trend continuation. Even more encouraging is that the 50 EMA slung around $99.60 and 200 EMA near $94.20 are stubbornly sitting below price, which is a pretty clear sign that the upward momentum is here to stay.

RSI had a bit of a dip toward 60 after flirting with overbought territory which makes sense because markets tend to consolidate when they reach extreme levels like that. If buyers can hold onto $103.30 then we could see some real upside pressure build toward $108 and $110.80. If the price does manage to break above $110.80 then I think we could see a really nice acceleration all the way to $116.50.

On the other hand if the price fails to hold $103.30 then we could see a deeper pullback toward $99.60 in the coming days.

Brent Crude Oil Outlook: Uptrend Intact Above $107 Support Zone

Brent crude is trading at around $112.00 and shows no signs of slowing down yet, still chugging along inside a rising channel. Price recently rejected near $115.00 but remains firmly above the $107.60 support zone which just so happens to line up with the lower channel boundary. The uptrend remains intact as we’re seeing a string of higher lows dating all the way back to mid April.

The 50 EMA is sitting around $103.50 and the 200 EMA at $97.80 both slope upwards which is a really clear indication that medium term we’re in the green. And just to reiterate RSI is holding above 60 which is a pretty clear sign of some sustained buying interest, even if price has been consolidating a bit lately.

A sustained move above $115.00 would be a big deal and if that happens then it’s only a matter of time before we hit $119.20 and potentially even $123.80. But on the downside, if the price were to break below $107.60 then the trend is certainly at risk and we could see the price drop toward $103.40.