Natural Gas and Oil Forecast: Truce Stability Fuels Technical Recovery — Can Oil & NatGas Push Higher?

Energy Markets Adjust to Post-Deal Supply Realignment.

As of Monday, June 22, the fundamentals for U.S. crude oil (West Texas Intermediate or WTI), Brent crude, and U.S. natural gas are in a transitional state, beginning to adjust from the disruptions of the previous week. That week was marked by a memorandum of understanding reached between the U.S. and Iran, which would remove the threat of a naval blockade and lead to the reopening of the Strait of Hormuz. This, in turn, would gradually re-open the flow of commercial ships, and enable a gradual recovery of Middle East production that was temporarily suspended at over 11 million barrels per day.

Meanwhile, oil inventories, that had decreased precipitously in order to meet demand during this short time of disruption, are expected to recover, though recovery may be delayed as the logistics of restoring oil supplies take time and the process may be complicated by the need for mine clearance and infrastructure repairs. The loss of demand, brought on by the higher costs and lower availability of oil, should be somewhat helpful in the immediate term. Nevertheless, the fact that oil refineries in most of the world’s primary consumption areas are expected to keep working flat out means that these physical balances will be very much influenced by the pace and scope of the recovery.

Turning to the other commodity, in the U.S. the supply of dry gas continues to increase, driven by increases in associated gas and gas supplies for LNG export. While the increase in supply will be sufficient to meet domestic demand, storage levels continue to rise in preparation for seasonal requirements. Meanwhile, in both Europe and Asia the prospects are that the pressure on supply should ease a bit further if the Hormuz channel re-opens as well.

Natural Gas Futures Rise to $3.328 – Ascending Channel Breakout Strengthens Bullish Momentum on the 2H Chart

Natural Gas futures are trading at $3.328 on the 2-hour NYMEX chart. Natural gas is showing bullish continuation candles above the 50-period moving average, $3.19, and has moved inside the blue rising trend channel. A series of higher highs since price bottomed at $3.099 suggests strong buying pressure.

RSI is above 55, indicating strong bullish momentum. Volume profile shows the $3.10 zone as a new support level. Based on Fibonacci extension, natural gas futures prices could extend gains in the $3.268-$3.377 range. On the 2H chart, the pattern is strongly bullish above the price swing, with a series of higher highs and higher lows indicating strong buying pressure.

Trade Idea: Buy at $3.328, targeting $3.377, with a stop-loss at $3.19.

WTI Crude Oil Bounces to $75.54 – Fibonacci 0.236 Support Encourages Stabilization on the 4H Chart

WTI Crude Oil is trading at $75.54 on the 4-hour chart. Following the plunge beneath the blue falling trendline, bullish bounce candles have been defending the 0.236 Fibonacci retracement zone, currently at $77.69. The price action shows bullish rejection wicks along with multiple ascending lows from the $72.79 price swing, indicating support absorption.

RSI is approximately 48, suggesting no strong buying or selling pressure. The volume profile shows the $77-$80 zone as a critical zone for price. The 50-Period Moving Average at $80.76 is still acting as a resistance against the price. On the 4-hour timeframe, the setup looks neutral-bullish over $77.69, with the price sitting right at the bottom of a falling trendline. 0.236 Fibonacci level with the developing higher-lows set-up makes this price a solid one.

Trade Idea: Buy at $75.54, targeting $77.72, with a stop-loss at $74.50.

Brent Crude Oil Holds $79.26 – Descending Channel Support Provides Near-Term Stability on the 4H Chart

Brent Crude Oil is trading at $79.26 on the 4-hour chart. The price bounced off of the descending channel at $78.50 after hitting some resistance from the 50-period MA, now $85.63. The 4-hour chart displays bullish and bearish candles, suggesting buyers are trying to defend the channel. The price shows bullish rejection wicks and some consolidation at that point, with limited downside continuation.

RSI is approximately 50, indicating neutral buying and selling pressure. The volume profile indicates the $80-$82 zone as a new fair value area. The next major price resistance block is around $82.85 and $85.00. On the 4-hour timeframe, the setup is neutral-bullish above the lower channel line with the price in a falling channel. Higher lows continue to attract buying interest during pullback.

Trade Idea: Buy at $79.26, targeting $82.85, with a stop-loss at $78.50.