Natural Gas and Oil Forecast: Hormuz Crisis Keeps WTI at $102 — Can Bulls Push to $105?

Market Overview

Oil and natural gas markets continue to trade largely on geopolitical supply threats and inventory trends. With the Strait of Hormuz still on near-shutdown as of the 11th week of the U.S.-Iran confrontation, about 20% of global seaborne crude supply has been lost. Iraqi crude exports are down as much as 90% as broader Persian Gulf shipments operate at a fraction of normal volumes, and stalled diplomacy has kept supply fears elevated for USOIL and UKOil even as OPEC+ states continue to ease some of their voluntary supply cuts and increase production quotas to prove their unity in the post-Abu Dhabi exit.

In the United States, commercial crude stocks fell for another week last week, as U.S. refining activity continues to outpace imports, with domestic oil production holding firm, as reflected by Baker Hughes’ U.S. oil rig count moving up slightly to 415, though still much lower than last year.

In natural gas markets, last week’s EIA inventory number showed an injection of 85 Bcf of the week ending May 8, close to normal in the build season, bringing inventories to 2,290 Bcf, well above last year and the five-year average. This is partly due to the warmer conditions of late in the spring season as heating consumption has eased to support inventory building, and while LNG exports remain healthy, the export market is competitive. Near-term forecasts point to moderating temperatures across much of the Lower 48, limiting the potential for increases in demand.

Natural Gas Price Forecast

Natural gas futures price is $2.934 (4h NYMEX) bouncing hard from $2.78, green candles reclaiming the red MA near $2.89. Price is respecting the lower white descending channel and showing bullish rejection at the Fib confluence.

RSI above 55 and we see improved short-term momentum. Recent higher lows set up inside of the small base with blue trendline support. $2.944 is the channel upside. Volume supports the upside and we have strong buyer absorption. Above $2.81 price is still showing a bullish structure while fighting the multi-week downtrend.

Trade Idea: Buy $2.934 target $2.944, stop $2.88.

WTI Crude Oil Pops Back to $102, Blue Channel Upturn Vindicated

WTI crude is now back at $102.12 (2h) bouncing off of strong green engulfing candles off of the $99.60 low and reclaiming the red MA of 50 periods around $100.65. Price is inside of a blue ascending channel set up from mid-April lows with clear higher lows. Recent higher lows and bullish continuation have cleared $101 and RSI is at 52+, indicating improved momentum.

Fib 38.2% level set up from May swing is the $100.65 and this is clearly being respected. Above $102.19 we see resistance then $103 to $105 top of the blue channel. The volume profile shows $100 is the dynamic floor now and we have strong buyer absorption. Price is inside the blue channel but still maintaining a bullish structure as long as $99.60 is respected.

Trade Idea: Buy $102.10 target $103.00, stop $100.50.

Brent Crude Oil Hangs at $110, Respecting Blue Channel Upside

Brent crude oil price trades near $110.49 (2h) off of lower line of the blue ascending channel from the $110.60. Green candles are making wicks higher lows and 0.382 Fib is the $103.26 and red MA near $108 is acting as dynamic support. RSI near 50 and we are respecting the blue channel since April.

Next up $105.55 (0.5 Fib) and $111.09 to $112 of the blue channel upside. Volume profile points to $110 as the pivot point and we see buyers getting aggressive on dips. Above $108.31 price still inside the green up-channel from April.

Trade Idea: Buy $110.45 target $111.10, stop $109.50.