Natural Gas and Oil Forecast: Strait of Hormuz Crisis Spikes Oil to $119 – Time to Short or Buy?

Market Overview

The global energy market has gone into a state of utter meltdown – some folks even refer to it as a ”full on geopolitical shock”. Instead of worrying about a predicted surplus in 2026 – those predictions have pretty much gone out the window as the specter of supply shortages takes centre stage.

Brent and WTI prices have spiked to multi year highs breaking past $119.50 and $119.48. What’s driving this sudden surge ? Mostly it’s a risk premium of 30 to 50 dollars per barrel that’s been tacked onto the current prices.

The underlying causes of this wild volatility are:

Supply Erosion: The Strait of Hormuz – the same waterway that handles 20% of the world’s oil trade – is looking like an almost complete blockage nightmare at the moment. And just to make things worse, oil production in southern Iraq has taken a massive hit of 1.3 million barrels per day.

Structural Deficits: Iran’s daily output of 3 to 4 million barrels is threatened, and this has led to some big league scrambling from the bigger oil producers like Saudi Arabia who are now offering up some rare spot crude sales in a bid to steady the ship.

Macroeconomic Fallout: But here’s the thing – the price spike has caused a right old panic sell-off in the stock market. Dow futures have plummeted by over 1000 points with people getting more and more spooked by the prospect of a recession and inflation.

Strategic Shift: And let’s be honest, the earlier forecasts which were predicting a surplus of 1 to 3 million barrels per day have all but been wiped out by the export blockages and force majeure declarations.

Natural Gas Price Forecast: Bullish Momentum Targets 200-Day SMA

Natural Gas has had a pretty good run up to a four week high near $3.47, thanks to the knock on effects from the Middle East, but it’s still 4 weeks since it got to that $3.50 mark. Now it’s established a higher low and is currently consolidating a bit above that 0.236 Fibonacci retracement level of $3.36.

Price is currently testing some resistance, and if that breaks then it’s off to the 200-day SMA (moving average) near $3.15 – that’s a pretty big deal because it used to be resistance and now it’s actually support. The RSI is still looking good but is getting a bit close to overbought, so it might be looking for a little pullback to the $3.28 (0.382 Fib) region before it can get going again.

Trade Idea: If Brent Crude holds above $107 then a retest of $119.50 could be on the cards – or you might look for a long on Natural Gas if it breaks above $3.50.

Crude Oil Price Forecast: Fibonacci Retracement or Trend Reversal?

WTI Crude Oil had a wild ride up to $119.49, but then a “Dark Cloud Cover” candle near the top signalled trouble. The price sliced right through that 0.236 Fibonacci level and now it’s testing the $101.76 mark which is a pretty big psychological number for the market.

The trendline we’d been following – the one that was going straight up – just broke, and that tells us that we’re moving from an all-out bull run to more of a correction.

On this shorter time frame, it looks like a descending triangle is forming, with the 0.382 retracement ($101.87) acting as a kind of make or break point for the market.   If $100 fails to hold then we might actually see a bigger drop all the way down to $96.43.

Trade Idea: Keep an eye out for a bounce at $96.43 (0.5 Fib level) and then get back in long and target $113.12.

Brent Oil Price Forecast: Overextended Bull Run Faces Fibonacci Reality Check

UKOIL (Brent Crude) just hit a ceiling near $119.49 and then promptly started going the other way – a pretty classic correction. Now the technicals are looking pretty sharp – a real “Engulfing” red candle that’s knocked price action right past the 0.236 Fibonacci retracement level at $110.50. So the parabolic trend, the one that was going so strong, is now losing steam.

The price is currently hovering round $107.40, and has got a bit of a problem because it’s testing that trendline again. And if that fails, then the next major stop is the 0.382 Fibonacci level down at $104.94 – that’s the last line of defence for the bulls. If that breaks as well then the next stop is $100.42.

Trade Idea: If $104.94 breaks, then a short play down to $100.42 might be on the cards.