Natural Gas and Oil Forecast: Oil Surges 5% as Hormuz Ceasefire Fails — Is $100 Brent Next?

Market Overview

USOIL is being pulled in two very different directions by the volatile situation in the Strait of Hormuz. The ongoing standoff between the US and Iran, and the recent ship seizures and attacks on vessels, is once again sparking fears about the potential for supply disruptions of 20% of the worlds oil – that’s roughly 20% of the global seaborne oil.

However,a fragile ceasefire and ongoing talks about the blockade has created a weird dynamic where physical tension from all those tankers stuck in the straits is clashing with hopes for a diplomatic resolution. US oil production is holding up pretty well and inventory dynamics are providing some support, but the headline risk is still keeping this market on edge.

NG is pretty much unaffected by the drama going on in the oil markets – and thats largely because of its own strong domestic fundamentals. We’ve got record US production, storage levels that are well above the norm for this time of year, and pretty mild spring weather forecasts all adding up to pressure on the balances as we head into the shoulder season. But then there is the LNG export growth which is providing some structural support, and we’re due for some warmer weather soon which should start lifting demand from the power sector. And yet for all this, near term oversupply is still keeping upside capped.

Overall, oil prices are stuck with this problem of a high risk premium hanging over them, while natural gas is pretty much just playing by the rules of supply and demand in the US market

Natural Gas Price Prediction – We Might Finally be Seeing a Turn

Natural gas is finally showing some of the early signs of a trend reversal after breaking out of that prolonged downtrend channel. Price is holding its ground above the $2.63 – $2.65 support zone, which is a big deal because it suggests that buyers are coming in on the dips now.

The recent push up towards $2.75 is a pretty clear sign of improving momentum and it is backed up by a rising RSI which is just screaming that we are seeing a strengthening of bullish sentiment in the market. Unlike the oil markets, natural gas is actually making higher lows which is a big deal because that usually indicates a shift in the longer term trend.

If we can see a sustained move above $2.75 then that could open the door to $2.90 – but if we cant hold above $2.65 then the whole bullish setup gets thrown out the window and we might see renewed downside pressures instead

WTI Crude Oil Price Forecast – its still Bearish Below $91

WTI has been trying to recover after that sharp drop down to $80 but the picture is still pretty bearish – The recovery has it trading now at around $87-$88 but its still stuck below that old support line at $91-$92 which is now acting more as a resistance. Now the 50 day moving average around $92 and the 200 day moving average near $95 are both acting as a cap on any attempts to push prices higher, and that just confirms there is still downside pressure going on

The RSI is coming back a bit but its still below 50, so we are seeing weak momentum overall – unless WTI can break and hold above $91.5 then all the rallies are likely just going to be corrective. If it does get rejected from there then you can expect to see prices go back down to around $86.5, and if the selling pressure really starts to build then we might even see a deeper move down to $82.9

Brent Crude Oil Outlook – its Still pretty Bearish

Brent is showing some slightly more resilience than WTI but the trend remains pretty fragile. It’s currently consolidating around the $95-$97 area, but its still respecting that downward trend line that is capping off any attempts to push prices higher

Both the 50 day and 200 day moving averages are still sitting above the price which is just reinforcing the idea that this outlook is bearish-to-neutral. The RSI is kinda hovering around the middle line which is just indicating a lack of real directional momentum either way

A decisive break above $100 is really needed in order to shift sentiment back towards a more bullish outlook for Brent – until then though it is likely to stay range-bound – and that means the downside risk is towards $92 and maybe even $90.5 if resistance continues to hold