Natural Gas and Oil Forecast: Inventory Draw Supports Oil Is WTI Ready for the Next Leg?

Oil News: Supply Recovery Meets Tight Inventories

This week, U.S. inventory drawdowns and anticipated fresh supply reports are driving oil fundamentals. According to the U.S. EIA, commercial U.S. crude inventories slid by 1.7 million barrels to 409.7 million barrels last week, about 6% below the five-year seasonal norm. Meanwhile, refinery utilization increased to 96.2%, indicative of solid summer fuel consumption, and U.S. crude production was at approximately a record 13.9 million barrels per day.

Traders are expecting a confirmation from tomorrow’s EIA inventory data of a continuing inventory decline, after U.S. total petroleum inventories, including the SPR, last week dipped to the lowest since 1984. The SPR dropped by 5.1 million barrels to 311.4 million barrels, the lowest since 1983.

In natural gas, fundamentals were buoyed by sustained LNG demand. The EIA predicted U.S. LNG exports at 17 Bcf/d on average in 2026, amid record U.S. output underpinning global supplies despite the unsettled situation in the Middle East that has caused shipping delays.

Natural Gas Technical Analysis: Natural Gas Consolidates Beneath Descending Trendline

Natural gas was near 2.856 on the two-hour chart, continuing to consolidate in the 2.83 to 2.89 level after bouncing off support in the 2.83 dollar area. The price continues to struggle below both the 50 EMA at 2.887 and the 100 EMA at 2.943, while it also faces downward trending trendline resistance. So we remain in a cautious short term view, despite the price consolidating in this narrow zone recently.

Resistance levels are at 2.890, and at 2.948 and 3.024 dollar while support will be at the 2.828 dollar and at the 2.780 and 2.729 dollar levels. RSI is at the 46 level.

In my opinion, Natural gas is still consolidating below both the 50 and 100 EMAs and the descending trendline resistance, with a break above the resistance at 2.890 dollar and the trendline being an important short term bullish trigger in this case. A failure at the resistance might again see prices consolidate around the current levels while attention might go back to the lower levels around 2.828 dollars.

WTI Crude Oil Technical Analysis: WTI Tests Key Fibonacci Resistance Beneath Long-Term Trendline

Daily chart for WTI is currently in the 82.10 dollar region, continuing the rally from the 67.00 dollar area at the July lows. It recently surged through the 50 EMA (81.80 dollars) and 100 EMA (82.47 dollars), but now faces significant technical resistance at the 61.8% Fibonacci retracement level of 83.48 dollar and a long term descending trendline. Both of these technicals will decide the next short term direction of price.

Resistance lies above at 83.48 dollars, and at 88.66 and 93.71 dollars, while support sits below at 80.34 dollar and 77.21, 73.43 dollars and the July low near 67.06 dollar. RSI is currently at the 57 level.

In my opinion, WTI continues to consolidate around the higher levels in the medium term as long as it remains above the 50 EMA. A breakout above the long term trendline and the 61.8% retracement level of 83.48 dollar might help WTI improve the short term outlook. On the other hand, a pull back might be seen in the support levels between 80.34 dollar and 77.21 dollars, in case the price is rejected off the levels around resistance.

Brent Crude Oil Technical Analysis: Brent Approaches Descending Trendline Resistance

Brent is trading around 88.69 dollars in the daily time frame, having recovered from the 70.08 dollar area during the July lows. The recovery in the price took it through the 50 EMA (85.54 dollars) and the 100 EMA (86.58 dollar). It is currently facing resistance below a descending trendline resistance since April. It is also near the 61.8% retracement level of 87.37 dollars.

All three technicals will have a significant influence on the near term price action. Resistance lies ahead at 91.82 dollars and 98.03 and 105.64 dollars, while support will be found below at 87.37 dollar and 84.12, 80.83 dollar and 76.72 dollars. RSI is at 62 level currently.

In my opinion, Brent is recovering well within a larger corrective structure, but a close above the trendline might be needed to improve the medium term technical outlook. A reversal from the resistance might pull it towards support in the 87.37 dollar to 84.12 dollar levels.