Natural Gas and Oil Forecast: Oil Exhibits 4% Weekly Drop; Recovery Ahead?

By:

Arslan Ali

Updated: Jun 6, 2024, 09:47 GMT+00:00

Key Points:

Oil prices rose on Fed rate cut expectations despite higher U.S. inventories and OPEC+ plans to increase supply.
U.S. services sector growth in May could weaken the case for rate cuts, with OPEC+ extending output cuts into 2025.
Saudi Arabia's July crude price cut and rising U.S. crude stocks pressured the market, causing weekly declines of about 4%.

In this article:

Natural Gas

-0.67%

WTI Oil

-3.12%

Brent Oil

-3.11%

Market Overview

Oil prices rose Thursday as expectations for a Federal Reserve interest rate cut in September grew, despite higher U.S. inventories and OPEC+ plans to increase supply. A Reuters poll indicates two-thirds of economists foresee a rate cut, which could boost oil demand by lowering borrowing costs.

However, U.S. services sector growth in May may weaken the case for rate cuts. OPEC+ agreed to extend output cuts into 2025, with gradual unwinding beginning in October, pressuring prices.

Saudi Arabia’s cut in July crude prices and a U.S. crude stock increase further weighed on the market, leading to weekly declines of about 4%. The potential rate cut could stimulate economic activity, increasing demand for both oil and natural gas. However, the bearish supply outlook and rising inventories are expected to limit price gains in the short term.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural Gas (NG) is currently trading below its pivot point of $2.79, suggesting potential bearish pressure. Immediate resistance stands at $2.85, followed by $2.92 and $3.01.

Key support levels are $2.66, $2.57, and $2.48. The 50-day EMA is at $2.66, and the 200-day EMA is at $2.40, indicating a short-term bearish outlook. A break above $2.79 could shift sentiment to bullish, while trading below this level may maintain the bearish bias.

The technical indicators suggest caution as NG remains below its pivot point, with resistance levels acting as crucial markers for potential trend shifts.

WTI Oil Price Forecast

WTI Price Chart

USOIL shows bullish momentum, trading above its pivot point at $73.38. Immediate resistance is seen at $74.91, followed by $76.08 and $77.10. On the downside, support levels are at $71.65, $70.40, and $68.87.

The 50-day EMA is at $75.92, and the 200-day EMA is at $78.54, indicating a short-term bullish trend. A sustained move above $74.91 could signal further gains, while a break below $73.38 may trigger a sharp selling trend.

Brent Oil Price Forecast

Brent Price Chart

UKOIL is trading slightly above its pivot point of $77.93, indicating potential upward movement. Immediate resistance is at $79.21, with further resistance at $79.77 and $80.62.

On the downside, immediate support is at $76.73, followed by $75.48 and $74.32. The 50-day EMA is at $80.17, and the 200-day EMA is at $82.92, suggesting a bearish trend below $79.21.

A break above $79.21 could shift the outlook to bullish, while maintaining levels below this could continue the bearish sentiment.

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About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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