USOIL, UKOil & Natural Gas Outlook: Saudi Exports Recover as Hormuz and Qatar LNG Risks Persist
Oil markets became better balanced on Monday, as there were signs that oil shipments out of the Middle East are not going to fall abruptly. Still, there are many uncertainties, and oil markets are still considered to be very nervous.
One of the main reasons for the market balance was the news that even though parts of the pipeline carrying Saudi Arabian oil across the country had been damaged, Saudi Arabia was still able to restore oil shipments, and is currently exporting more than 4 million barrels a day. This is a big increase from August, where the exports had dropped to about 2.4 million barrels a day.
Although exports have increased, the amount of tanker traffic through the Strait of Hormuz has been very low. Only 12 tankers were seen traveling through the strait this past week. There are also many oil tankers that are not broadcasting their locations, so there may be a lot of oil being transported that is not showing up on satellite. According to some estimates, about 34 million barrels of oil were transported through the strait last week.
The costly workaround is being implemented by Gulf producers. Shuttle tankers and ship-to-ship transfers have increased, especially near Oman. Reuters has reported that the flows through the Strait of Hormuz have recovered to around 6.5 million barrels per day. However, logistics costs on certain routes have reportedly reached as high as $30 per barrel. With little to no progress on negotiations, the focus is on the U.N. meetings this week to gauge any potential breakthroughs. Rising diplomatic efforts have lessened some geopolitical concerns.
Natural Gas is expected to remain tight. QatarEnergy has stated its LNG output is a “very minute” volume. Without the resolution to the Hormuz situation, Qatar could further restrict LNG output and in turn delay the country’s infrastructure and LNG expansion projects.
With oil and LNG remains firmly tight, the US is expected to increase exports.
Fundamental bias: USOIL neutral-to-bullish, UKOil neutral-to-bullish, Natural Gas bullish.
Natural Gas Technical Analysis: NG Holds $2.84 Support as $2.91 Resistance Keeps Recovery Capped
Currently, natural gas is trading at $2.88 and is holding support at $2.84. Price action has been capped at $2.91, along with the moving averages, and is currently under the $2.91 resistance level. This creates a near-term sideways range, with higher probabilities for a break below the range.
If sellers gain control, near-term support is expected at $2.84. Below that, additional support is expected at $2.81, $2.78, and $2.75.
The RSI is neutral, and centered over the 50 average, suggesting the market is range-bound. Natural gas is expected to remain range-bound, with a slight bias to the downside.
A break above the range would put the new range top at $2.95, and ultimately $2.99. A break below the range is expected to put support at $2.81 and $2.78.
Natural Gas Price Forecast
Every new Natural Gas analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Natural Gas forecastsWTI Crude Oil Technical Analysis: USOIL Breaks $94.76 Support as $91.73 Comes Into Focus
As of writing, WTI crude oil is quoted at about $93.93. What I find noteworthy in this 1-hour chart is that price recently broke support at $94.76, and is currently under both of the moving averages. Price has also failed to make a new high above the $106.80 level, which tells me the current selling momentum is still elevated.
Currently, I’m looking for support at $91.73. A breakdown below there would allow price to challenge support at $88.68. For the bears to take control of the trend on a break below $88.68, they would then have to worry about buying pressure coming back into the market at $94.76. If buyers were to push price back above $94.76, resistance would then be expected to come in at $97.93 and $100.35.
Right now, the RSI is in over-sold territory, so a small bounce from these levels is to be expected. However, looking at the big picture and the overall trend, as long as WTI is trading below $97.93, I’d expect prices to move lower. If price were to subsequently break $91.73, I would expect lower prices to the downside. Conversely, a break above $97.93 would give me a new bullish bias.
Brent Crude Oil Technical Analysis: UKOIL Tests $101.20 Support as $102.76 Turns Into Resistance
Brent crude oil is currently trading at $101.63. It has been in a long-term uptrend and is now trading below both of its moving averages and a rising trendline. Moreover, the recent effort by the bulls to move the price has failed at $102.76 and the bear trendline is now approaching the $101.20 support level.
Should the $101.20 level break, then the price could fall to the $100.10, $98.25, and $96.82 support levels. On the other hand, if the price continues to move up, then the first resistance may be found at $102.76, then $105.04 and $106.97.
The relative strength index (RSI) is still in a bearish region of the RSI indicating that the price could be moving lower. However, the RSI could still be forming a bullish cross, indicating an uptrend may occur. As long as the price is under $102.76, I will consider the trend to be bearish. However, a move above $105.04 would be bullish. A break below $101.20 could possibly enhance the bearish outlook and be targeting the $100.10 and $98.25 levels.
