Natural Gas and Oil Forecast: Oil Crashes 16% as Ceasefire Ends Hormuz Supply Risk

Market Overview

WTI crude has taken a big hit, plummeting to $95-$97 – that’s a drop of 14-16% – as markets suddenly unwind the extra cost people were prepared to pay due to the risk of Strait of Hormuz disruptions now that a two-week ceasefire has been announced and tanker traffic is flowing again.

That’s good news for global oil supplies – we were talking about a near 20% hit to supply earlier but now that’s not looking like such a big deal. Brent’s followed suit, with prices dropping down to $93-$95.

Whilst we’re still a fair bit above the pre-conflict prices of $67-$73, this sudden change is telling us the market’s starting to focus on fundamentals again, but volatility’s likely to stick around until we see how the ceasefire is working and if any old risks come back to the fore.

Natural Gas Weakens as Energy Market Ditches its Worry Habit

Natural gas prices have fallen to $2.71-$2.75 – that’s a drop of 4-5.5% – as a general sense of unease in the broader energy market starts to fade in the face of ebbing geopolitical tensions. The thing is, natural gas isn’t as closely tied to Middle East supply as oil is, but the overall feeling of risk has just gone and it’s all affecting energy markets here.

Then on top of that you’ve got US production coming back on line and a milder weather forecast taking some pressure off near-term demand, both of which are making people think prices could go down a bit further.

At the moment, we’re looking at a classic case of oversupply and a bit of softening demand – unless you get some kind of weather or LNG export shock to send prices up again, I’d say we’re in for a bit more price weakness.

Natural Gas Price Forecast: Bearish Trend Extends Toward Key Support

Natural Gas (NG) is continuing to head downwards, now trading around $2.71 after breaking below $2.77 support level. The price remains stuck under a rather steep trendline and both moving averages – which is reinforcing the bearish momentum.

RSI is hovering at around 40, which is a pretty telling sign that demand is really struggling to get going and there arent really any strong signals here for a reversal. If we can’t hold $2.70 then the next big downside target sits at $2.65, but a recovery above $2.82 could probably help to stabilise the price a bit.

Trade idea: Looking to Sell if we break below $2.77, with a target of $2.65.

WTI Oil Price Forecast: Sharp Sell-Off Tests Trend Support

WTI Crude Oil (USOIL) has taken a wild tumble from $112+ down to around $96, not just breaking below its 50 day moving average but also smashing through key horizontal support – thats a pretty clear indication that short-term sentiment is shifting big time.

Price is now hanging by a thread on a trendline around $92-$94 – which is just about the most critical spot for keeping the big picture uptrend alive.

RSI is landing in over-sold territory, which is a pretty good sign that selling pressure is finally starting to run out of steam – a bounce from this zone could well trigger a bit of a leg up towards $100-$105, but a move all the way below $91 would be bad news indeed and would probably send us sliding all the way down to $88.

Trade idea: Looking to Buy in at around the $92 support level, with a target of $100.

Brent Oil Price Forecast: Breakdown Signals Weakening Structure

Brent Oil (UKOIL) just slipped quietly below its $100 psychological level and is now hovering around $94, having lost both trendline support and the 50 day moving average – the combination of those two things is a pretty clear indicator that the the short-term trend is looking bearish and momentum is actually picking up speed.

The 200 day moving average around $91-$92 is the next big support level to watch out for. RSI is flirting with over-sold levels which is a pretty clear sign that we might be due for a bit of a bounce, but the overall structure still looks pretty weak until we can get back up above $100.

Trade idea: Looking to Sell if we break below $99, with a target of $92.