Natural Gas and Oil Forecast: Strait of Hormuz Squeeze – Is $100 Oil Next?

Energy Markets on Edge as Strait Risks Reshape Oil, Gas Outlook

WTI crude has stabilised around $71 a barrel after jumping by about 6% the day before, as the escalating geopolitical tensions have really started to catch people off-guard and there are serious concerns now about potential supply disruptions.

The Strait of Hormuz -that’s the key waterway which carries nearly 20% of the world’s oil shipments- is getting increasingly dicey, with reports coming in that tanker traffic has slowed down dramatically.

Adding to the worries are some temporary shutdowns at the big regional facilities – that’s putting even more pressure on the idea that supply will get tighter. As a result, the risk premium is making crude and gas prices a lot more volatile – and in turn that’s boosting the forecast for price increases.

Traders are now pricing in the very real possibility of exports being curtailed, and we’re seeing that reflected in the price of Brent and WTI , with both reflecting just how sensitive the market is to what’s going on in this region and shifting expectations about supply.

Natural Gas Price Forecast

Natural Gas (NG) futures are currently trading at $3.03 on the 2 hour chart, having pushed clear of the $2.97 resistance zone and now sitting within a short term ascending trendline. The price is also back to sitting above those two moving averages near $2.90, which suggests the momentum is once again gaining strength after our late February rebound from the $2.77 level.

With the price now having broken clear of $3.00, attention will now turn towards $3.07 and then $3.16. Should we manage to push beyond that range, the $3.23 level could find itself exposed. Downwards, at least for the moment, $2.97 will be the first level to watch should the price start to drop back – and then there’s that deeper support level of $2.89 to keep an eye out for.

Trade idea: If it does manage to break clear of $3.00, then we’d look to buy above that level with the aim of getting up to $3.15, and we’d set a stop just below $2.88 to protect ourselves in case the price starts to pull back.

WTI Oil Price Forecast

WTI crude (USOIL) is currently trading at $72.67 on the daily chart, solidly within an uptrend that’s been taking shape in a rising channel. Having broken through $70.55, the price is showing a clear bullish momentum, still sitting comfortably above both the 50 day and 200 day moving averages.

Resistance looks to be in the near future, at $74.09, and then of course there’s the make-or-break zone at $77.12. If we do manage to push through that, then the $80.72 level starts to look more attainable. Should we start to drop back, then $70.55 will be the level to watch out for as support, with further protection from the channel base down at $67.58.

Trade idea: Consider buying on dips around $71.00, aiming to get up to $77.00, and we’d stop losses just below $67.50.

Brent Oil Price Forecast

Brent crude (UKOIL) is currently trading at $79.81 on the daily chart, with the price still moving steadily within an ascending channel. A break clear of $78.83 has the bulls feeling optimistic once more, and we’ve already started to see the price nudging against that key $82.30 resistance level. The fact that both 50 day and 200 day moving averages are trending upwards is keeping the overall structure looking positive.

If we do find a way to break clear of $82.30, then it looks like the path will start to open up towards $84.71, with the upper boundary of the channel just above $87.91 waiting in the wings as the next target. Downwards, at least for the moment, $75.87 and $73.32 are giving the bulls a pair of immediate support levels.

Trade idea: Consider buying in on any dips around $76.00 with the aim of getting up to $84.50. We’d set a stop just below $72.50 to protect ourselves should the price start to pull back.