Natural Gas and Oil Forecast: Saudi Pipeline Outage Deepens Supply Risk

USOIL, UKOil & Natural Gas Outlook: Saudi Pipeline Outage Deepens Supply Risk as LNG Demand Tightens Gas Market

Supplies continue to dictate prices in the oil market today, and there are even deeper worries about energy supplies from the Middle East, following the latest attacks on Saudi Arabia. Houthi rebels from Iran launched a missile and drone attack on the Khamis Mushait airbase yesterday, and the countries from the Gulf have put off the talks with Iran that were meant to lower the threats on shipping.

For Brent and WTI, more importantly, is the Saudi East-West pipeline that is still down from the attacks earlier this week. That pipeline was carrying around 4 mb/d, or about 4% of the world’s total supply, to Yanbu on the Red Sea where it can bypass the Strait of Hormuz and allow export flows from Saudi Arabia. Traders and Saudi crude oil buyers believe that if the pipeline is down for an extended period, it will result in a drop in Saudi exports and an even more constrained supply.

Hormuz is really constrained too. With only around 10 ships. per day crossing the Strait, compared to a 10-day average of 14 ships per day previously. Before the U.S.-Iran war, the Strait of Hormuz was carrying around one-fifth of global oil supplies. So with the Saudi pipeline outage and Hormuz under stress, there are two critical export routes that are really impaired together.

The International Energy Agency has also drastically reduced the estimates of their 2026 balance to a sharp drop of 5.7 mb/d in global production, mainly due to persistently low supply from the Gulf.

For natural gas, U.S. fundamentals are more balanced. Less production occurrred in the Lower 48, averaging 113.4 bcfd as of September. Output fell to a two week low, but strengthening LNG feedgas demand has offset this somewhat. The disruptions to exporting Qatar and the UAE have likely removed 36 million tonnes of LNG from the market in 2021. As a result, the U.S. LNG is needed to replace missing cargoes from the Middle East.

Fundamental bias: USOIL bullish, UKOil bullish, Natural Gas moderately bullish.

Natural Gas Technical Analysis: NG Tests Descending Trendline as $2.92 Resistance Limits the Recovery

Currently, natural gas is trading around $2.89 on the 2-hour chart having rebounded from the $2.78 support level. What is significant is that the price has recoveredabove a series of short-term moving averages, but the recovery has stalled and actually tested the descending trendline and the $2.92 resistance zone. Thus, the current zone is better defined as a critical price zone and should not be considered a confirmed bullish break.

The first significant level of resistance comes in at $2.92. A closure above that level would expose $2.97 and $3.03. Should the price decline, the first significant level of support comes in at $2.84. Should the price decline more firmly, the next support could come in at $2.78 or $2.73.

The RSI has improved, but is still trading in a neutral range. A break above $2.84 would confirm a bullish breakout. A break below $2.84 would cancel the bullish recovery. I am bullish with a close stop loss order.

WTI Crude Oil Technical Analysis: USOIL Holds Rising Trendline as $104.94 Breakout Comes Into Focus

WTI crude oil trades at $103.22 on the 1 hour chart and I am focused on the respect given to the rising trendline and the price comfortably above both moving averages. The recent price correction found support at $101.00, and I interpret that to mean that the buyers are protecting the uptrend and will not allow the price to fall significantly lower.

The first resistance to keep an eye on is at $104.94. A break above that would expose $107.00 and then possibly $108.84. For the first support, $101.00 is the most important, with $98.73 and $96.68 coming into play should the structure begin to lose its upward trend.

RSI is above the midline which means that there is some upside momentum but it is not to a extent that is concerning. I will remain bullish as long as WTI trades above $101.00 as well as the rising trendline. A break of $98.73 would be concerning from a bullish standpoint, and a move above $104.94 would justify a move to $107.00.

Brent Crude Oil Technical Analysis: UKOIL Holds $105.14 Support as $109.95 Remains the Key Upside Test

Brent crude oil currently trades at $107.48 on the 1 hour chart after trading sideways within the support area at $105.14. What I find interesting is that price remains above both moving averages, and respects the rising trendline which keeps the overall short term uptrend intact.

The overall structure of the trend is bullish and is intact while price trades sideways below resistance, but remains above the moving averages and respects the rising trendline.

The first level of resistance I have is currently at $109.95. Should this level break cleanly, then we can expect $112.17 next. If we consider the downside, the first important area of support is at $105.14. Below this support, we have $103.52 and $101.83. If we break this area on the downside and move below this level, $99.56 comes back into the picture.

RSI is already beginning to turn higher and is currently in a good spot, showing that a recovery is likely, without excessively overbought levels. I favor the long side so long as Brent trades above $105.14. I would become more defensive below $103.52. A strong break above $109.95 would confirm $112.17 next.