Natural Gas and Oil Forecast: Oil Surges to $105 – Is a $120 Breakout Next?

Oil Surges on Renewed Supply Risks While Gas Lags Demand Signals

Crude oil staged a sharp comeback to get back towards $105 on April 2, a near 5% intraday gain that came as geopolitical tensions suddenly reinstated the premium people demand for risk that goes with the possibility of disruptions in a key shipping corridor that accounts for about 20% of the worlds supply. This sudden turnaround completely turned around moves that had seen the price drop as low as $98, and its clear that market players are being extremely sensitive to shifting expectations about the duration of conflicts and the security of the route that crude oil is being transported on.

Despite a small build in US inventories & also a relatively modest increase of around 138,000 barrels per day from OPEC+, the markets are still much more focused on the uncertainty of supply, and analysts are pointing to the possibility of the price rising towards $120 if there are any further disruptions.

Natural gas pretty much ticked along, stuck between $2.80 and $3.00 with mild weather and high storage levels keeping it under pressure, and remarkably it barely responded to global tensions despite some problems with LNG shipments.

Natural Gas Range Tightens as Triangle Breakdown Threatens

Natural Gas is stuck trading inside a pretty tight range below that descending trendline, and it’s just been having a hard time breaking above that $2.98 resistance point. Right now, it’s definitely showing some weakness – both the 50-day and 200-day moving averages are looking pretty bearish, and the candles have been showing some pretty sharp rejections near $3.05.

We still have support holding strong at $2.79, but that $2.98 mark is just not wanting to budge. The RSI is looking pretty meh at the moment, stuck right around 50 and just sort of shrugging its shoulders.

A break below $2.79 could be the start of a deeper drop, all the way down to $2.71 and maybe even $2.65. Of course, a break above that $2.98 might flip the script and start things heading in the other direction.

Trade idea: Sell the natural gas if it breaks below $2.79, and target $2.65. If you want to set a stop, you should probably go above $2.98.

WTI Crude Oil Eyes Breakout Above $106.70 Resistance

WTI is stuck hovering around $106.45 right now, caught inside a tight symmetrical triangle . The price is testing out that descending trendline and yet still managing to hold on to its support at that ascending trendline near $100 – and it’s been doing so for a while now. You can see on the charts that some recent candles have shown some good old fashioned higher lows and solid closes above the 50-day moving average.

The longer term 200-day moving average – which is lurking at around $92.11 – is also confirming that bigger picture trend is indeed still in an uptrend. Momentum is clearly on the rise as the RSI is heading towards 60, which is a sign that the engine is revving without getting overworked.

The immediate resistance that WTI is looking at is that $106.70 mark, with $111.44 not too far behind. You also have some support right around $101.50 and $96.67. If it does break out of that triangle, who knows – but if it doesn’t, the price might just retest the triangle base.

Trade idea: If you think it’s going to break out, buy it just above $106.70 and aim for $111.40. For your stop, you’ll want to go below $101.50.

Brent Crude Holds Ascending Trendline, Targets $109 Zone

Brent is still very much respecting that ascending trendline that started back in mid-March – we’re talking rising channel territory here. It’s been bobbing along above that 50-day moving average near $104, and I’ve been keeping an eye out for some interesting recent candles that show some tasty rejection wicks on the dips – that’s a good sign that buyers are strong.

We do have some resistance on the horizon at $109.35, followed closely by $114.03, and then there’s that support at $104 and $100 that’s looking pretty solid.

The RSI is hovering around 55, which is sort of neutral but leaning slightly towards the bulls. If Brent can manage to break through that $109.35 mark and hold onto it, then I think we could see a nice little push upwards.

But, if it starts to falter and breaks that ascending trendline, then we might just see some deeper retracements towards $98.91.

Trade idea: Buy Brent on any dips near $104, and aim for $109.35. If you’re looking to set a stop, you should probably go below $100.