Natural Gas and Oil Forecast: Oil Plunges 8% as US-Iran Peace Talks Move to Pakistan

Oil Retreats on Diplomacy Hopes as Supply Risks Still Hang in the Balance

Crude oil markets are slowly moving away from the panic-fuelled price surge we saw after the US blockade and rising geopolitical tensions… and that’s because diplomatic efforts are starting to calm things down a bit. Following on from the initial spike, traders are now taking a closer look at the likelihood of a prolonged disruption versus some kind of deal getting done. The prospect of renewed talks is starting to cool down the risk premium that sent prices soaring in the first place, which is making people more inclined to take profits and dial back on those long bets.

But at the same time, we still haven’t seen much of an improvement in the underlying supply situation. Routes are still pretty tight, and there’s still a lot of uncertainty around logistics, which is keeping the medium-term risk factor well and truly alive. This is creating a bit of a disconnect between the near-term sentiment, which is still really driven by headlines, and the fundamentals, which I’d say are still pointing to some pretty tight conditions.

On the demand side, there’s a growing worry that prices are getting too high and will actually end up weighing on consumption and overall economic activity. That’s a concern that policymakers and energy bods are starting to flag up more and more. This demand sensitivity is adding even more complexity to the picture, and it’s going to make it pretty hard for prices to keep going up unless we see some kind of major supply disruption.

Overall, oil remains firmly in the headlines, with sentiment flipping back and forth between geopolitical risk and diplomatic relief.

Natural Gas Picking up Where it Left Off – Downtrend Continues Below 2.70 Bucks

Natural gas is trading at $2.59, and is still very much in the grip of a downtrend within a downward channel. Price has broken below that $2.71 support zone, which is now acting as resistance, and that’s confirmed our bearish continuation scenario. The candles are small and consistently closing lower, which is telling us that sellers are firmly in control – and it’s not just a panic move either.

Our 50-SMA near $2.72 and 200-SMA around $2.79 are both trending downwards, which is reinforcing the bearish structure. RSI is hovering around 35-38, and while it’s close to oversold, there’s no sign of divergence yet, which tells us that our downside momentum is still intact.

Unless we can reclaim that $2.70 level, the path of least resistance is going to stay lower, towards $2.56 and potentially even $2.50. It’s going to take a break above $2.79 to shift the short-term bias.

Trade idea: Sell below $2.70, look for a target of $2.50, and set a stop above $2.80.

WTI Crude Oil Holding Steady at 90 Buck Support – Is it a Double Bottom or a Breakdown Waiting to Happen?

WTI crude is currently trading at $92.40, bouncing off a rising trendline and that key horizontal support around $90-$91. The last few candles have shown some pretty encouraging signs for buyers, with long lower wicks indicating that folk are stepping in to buy after the price dropped from $105. Price is trying to form a bit of a double bottom, but confirmation is still pending.

The near $98 50-SMA is sloping downwards, and is acting as dynamic resistance, while the near $91 200-SMA is running right alongside current price, making this a key decision zone. Our RSI is currently hovering around 40, which suggests that momentum is pretty weak, but not quite oversold yet – which gives us a bit more room for a bounce up or a move lower.

If we can break above $95.50, I think we could see a move towards $99, but if we fail to hold onto $90, we’ll be looking at a move down towards $87.

Trade idea: Buy above $95.50, look for a target of $99, and set a stop below $90.

Brent Crude Facing that Descending Trendline – Pressure Ramps Up Below 100 Bucks

Brent crude is trading at $96.20, consolidating below a descending trendline that has been capping price since early April. The price structure tells us that there are still plenty of sellers out there, even though price has stabilised above that $95 support.

The near $99.30 50-SMA is trending downwards and is acting as our immediate resistance, while the near $92 200-SMA is providing some underlying support. Candlestick structure is being really indecisive at the moment, reflecting the balance between buyers and sellers – with RSI sitting at 45, it’s hard to get a clear idea of direction.

If we can break above that descending trend line and the $99.30 level, I think we could see a move up towards $103.80, but if we get rejected, its downside risk all the way down to $92 and then $91.

Trade idea: Buy above $99.30, target $103.80, and set a stop below $94.50.