Natural Gas and Oil Forecast: Inventory vs. OPEC+; Which Force Will Rule Oil Next?

Energy Markets Reprice Risk as Geopolitical Tensions and OPEC+ Policy Collide

Oil prices levelled off at the end of the week but still looked set to end the week in the red, with Brent down around 1% and WTI down about 1.3%. The diplomatic efforts over the past few days have at least taken the immediate threat of a supply disruption off the table. Traders now have to weigh the renewed geopolitical tensions against the possibility that OPEC+ may decide to pump an extra 137k barrels a day at its next meeting.

Despite some pretty wild price swings that took the price up more than 1 dollar at a time, there are still $8 to $10 worth of built in risk premiums on the market – which at the moment still reflect worries about how easy it is for oil to get from the well to the pump, and the fact that around 1 in 5 of the worlds crude oil makes that pretty long and tricky journey.

Meanwhile, the natural gas market is also pretty sensitive, because the broader instability could really shake things up and make the regional energy trade and volatility patterns look completely different.

Natural Gas Price Forecast: $2.85 Supply Caps Recovery, $2.77 Support at Risk

Natural Gas futures are trading around $2.838 on the 2 hour chart, and are taking a stab at the $2.85 resistance line which used to be an important support area in the past. The recent price action has been a bit of a mixed bag – the candles have been small and indecisive right near this level, while the 50-day EMA is currently around $2.93 and the 200 day EMA is about $2.90 – both sitting above price and pointing downward in a bearish direction.

Price has been stuck in a short term descending channel for a while now, with a series of lower highs since it peaked at $3.17. The key levels to watch are $2.77, $2.69 and $2.60 – that’s the horizontal support zone we’re looking at. The RSI is hovering around 45 at the moment, which is a pretty weak level, but at the same time we haven’t seen any real bullish divergences yet. If a rejection occurs at $2.85, that could allow bearish pressure to take hold.

Trade idea: If the price drops below $2.82, then we are looking to short it, targeting $2.75, and setting a stop loss above the $2.90 level.

WTI Crude Oil Price Outlook: $65.23 Fib Support Keeps $66.00 Break in Focus

WTI Crude is bouncing around $65.70 on the 2 hour chart after a nice rebound from the $63.95-64.00 zone, right above the 0.618 Fibonacci level. As it stands, price is holding firm above that 0.382 Fib at $65.23 – now acting as a crucial short term support point.

When you look at the recent candles, you’ll see some long lower wicks forming near $64.50, which is a clear sign of traders jumping in to buy the dip. Meanwhile, $66.01 at the 0.236 Fib level still looks like a major obstacle for the price to overcome.

The 50 session moving average is lurking just below $65.40, and the 200 session average is slowly creeping up towards $64.60.

Trade idea: Buy when the price breaks above $66.10 and see if it can make it to $67.20. If it fails to get up there, set your stop loss below $65.20.

Brent Crude Oil Forecast: $71.04 Support Holds as $72.30 Resistance Looms

Brent crude is currently hovering around $71.27 on the 2-hour chart, and thankfully for the bulls, it’s still clinging to the $71.04 support zone, which just so happens to be right at the .236 Fibonacci level at $71.03 – thankfully its holding up for now.

The 0.382 Fib at $70.23 and the .5 level at $69.58 are kind of providing a layer of protection underneath – but the price remains nicely above that rising 200 day EMA around $68.90, while the shorter term 50 EMA sits just around $70.80, acting as a bit of a pivot for now.

That RSI is trying to make a comeback towards 50, which is only fair given all the craziness we’ve seen lately. If we see a clean break above $72.31 , then I’d say we’ve got confirmation that the trend is indeed going to keep on going up – maybe up to $73.18.

Trade idea: If Brent breaks above $72.40, then I think it’s worth taking a long position targeting $73.20. My stop would be below $71.00