Natural Gas and Oil Forecast: Oil Eases on Tehran Diplomacy, Can Brent Clear $112.20?

Oil Retreats on Tehran Diplomacy, but Saudi Attacks Keep Supply Risk Alive

Crude eased for a second session on Tuesday as a regional diplomatic push raised hopes that the Iran war will not escalate further. Natural gas, meanwhile, is pricing in a warm winter.

Brent: Talks in Tehran, Attacks in Saudi Arabia

Officials from Saudi Arabia, Turkey and Pakistan met Iranian officials in Tehran on Monday, and the four countries agreed to continue talks on peace and security, Iranian state media reported. Riyadh said the visit aimed to open negotiating channels and “prevent the return of military escalation.” Qatari mediators had traveled to Tehran a day earlier. In Washington, President Trump told Fox News on Sunday it was “getting to be decision time” on whether to make a deal with Tehran or “finish it off.”

The losses have been small, though, because the peace is still fragile. The Houthis renewed their attacks on Saudi Arabia, and data from the Washington Institute for Near East Policy, a Washington-based think tank, show October has been the worst month on record for attacks on commercial shipping in and around the Strait of Hormuz. Michael Alfaro, chief investment officer at Gallo Partners, told CNBC that this uncertainty has added roughly $20 a barrel to oil prices. Traders call that extra amount a risk premium, the price paid for the chance that supply gets cut, and it is what diplomacy is slowly chipping away at.

WTI: Inventories in Focus

US commercial crude stocks, the oil held by companies rather than the government’s emergency reserve, have fallen for three straight weeks, leaving them about 3% below the five-year average. The next EIA weekly report arrives on Wednesday, the same day the Fed announces its rate decision, so oil traders face two big events within a few hours.

Natural Gas: Traders Bet on a Warm Winter

US gas futures fell about 4% to a six-month low of $2.526 per mmBtu on Monday on forecasts for milder weather over the next two weeks, Reuters reported. The premium of March 2027 futures over April 2027 fell to a record low of around 6 cents. Because March is the last month of heavy heating demand, a small premium means traders see little risk of a late-winter shortage.

Hedge funds hold their largest short position, meaning bets on falling prices, in data going back to 2013, Bloomberg reported, as expectations grow that a Super El Niño, a strong warming of the Pacific that often brings milder US winters, will keep heating demand low. Yet storage is getting tighter, not looser. Analysts expect the surplus over normal levels slipped to 0.7% in the week to October 23, data the EIA publishes on Thursday.

WTI Technical Analysis: Oil Pulls Back From $104.05 as Uptrend Holds

WTI is trading near $101.58 on the 4-hour chart, still inside a rising channel, two parallel lines that have guided prices higher since July. The latest rally stalled at $104.05. Both moving averages, lines that show the average price over time, are rising well below price, so the uptrend is intact.

Resistance, where sellers tend to step in, is $104.05, then $107.64. Support, where buyers tend to step in, is $96.72, then $91.15.

RSI, which measures the strength of recent buying and selling, has eased to about 67 after touching overbought, meaning prices had risen too fast. I stay bullish while WTI holds above $96.72. A close above $104.05 would open $107.64, while a drop below $96.72 would point to $91.15.

Brent Technical Analysis: Oil Holds $109.22 as $112.20 Caps the Channel

January Brent futures are trading near $109.84 on the 4-hour chart, inside a rising channel that has guided prices since late September. Sellers pushed back twice at $112.20, the top of the channel, and Brent now sits in the middle of it.

The first support is $109.22, then $106.06. On the upside, $112.20 is the first resistance, followed by $114.37.

RSI is near 59 and below its signal line, a slower average of RSI, so momentum is cooling. Brent keeps a slight bullish lean while it holds $109.22. A close above $112.20 would open $114.37, while a drop below $109.22 would point to $106.06.

Natural Gas Technical Analysis: NG Stays Below $2.70 After Bounce From $2.50

November natural gas, which expires on Wednesday, is trading near $2.60/MMBtu on the daily chart. Buyers stepped in at $2.50 after a sharp drop from $3.34, but prices are still below $2.70, the old August floor. Both moving averages are above price, which keeps the trend pointing down.

The first resistance is $2.70, then $2.82, a Fibonacci level that marks how much of the drop has been recovered. Support sits at $2.50, then $2.34.

RSI is near 31, close to oversold, meaning prices fell very fast. In my view, gas stays bearish below $2.70. A close below $2.50 would open $2.34.