Oil Surge Anchored in Supply Risk as NFP Looms

Crude prices are still being dictated by the usual suspects – geopolitical risk – but with a brand new twist: disruptions here and there around the Strait of Hormuz. This is the major route that handles about 20% of the worlds oil and it’s been causing prices to go through the roof – WTI even briefly traded above Brent at one point, climbing by over 10 percent at one stage. It’s been a wild ride, all because of the supply concerns and frantic trade flows trying to keep up. But then Washington dropped some mixed signals and investors got a bit spooked – Wall Street was all about that risk premium and what it means for future supply interruptions.

OPEC and its buddies have been doing their thing – ratcheting up the oil output a bit here and there – but in the short term? The market is still more worried about those potential supply disruptions rather than any real growth in supply.

But while all that is going on, Natural Gas is just chillin, holding steady within a pretty narrow range. It seems pretty clear that US weather is mild, we’ve got plenty of gas in storage and there’s much more than enough gas coming out of association jobs. You know, just to put things into perspective.

Now that’s all well and good but our attention is on the US labour market now. Those initial jobless claims were looking pretty good – only 202K. But the real game is payrolls – we’re talking 60K to 65K here and it’s going to have a major say in what the Fed does next and how that impacts currency markets and commodity prices.

Natural Gas Holds Base as Descending Trendline Caps Recovery

Natural gas at 2.80 is just trying to stabilise near the key support at 2.79 after a long period of just going sideways. Price is still below the descending trendline and both moving averages which tells us it’s still got the weak trend. The candle structure is showing us a lot of small-bodied candles which just suggest a lack of momentum.

The RSI is just sitting around 45 which is a neutral sign. A break below 2.79 could see price head down towards 2.71, 2.65 or somewhere else, while a move above 2.98 would be the first sign that this trend might actually be turning around.

Trade idea: Sell below 2.79 with the target of 2.65 and a stop loss above 2.98.

Oil Breakout Extends as Trendline Resistance Gives Way

WTI crude at 112.05 has finally cleared a long-standing descending trendline which confirms that it has broken out of a long consolidation phase. The strong bullish candles with full bodies tell us there’s a lot of buying going on and price is happily sitting above the 50 day and 200 day moving averages which is a great sign for the trend to keep going.

The shape of the price action now looks suspiciously like a breakout channel and as a result the previous resistance of $111.40 is now giving way to become support. The rsi is pushing hard towards 70 which means the momentum is getting a bit stretched.

Trade idea: One possible trade would be to buy above $112.00 with your sights on $119.30 and with a stop loss below $106.70.

Brent Crude Tests Range High as Buyers Defend Trendline

Brent crude at 109.23 is on the verge of testing a key area of resistance around $109.80 after having a pretty good bounce off the ascending trendline support at 104.00. The 50 day and 200 day moving averages are still below price which tells us that the trend is still intact.

The recent candles have shown steady accumulation with not too much downside showing, which tells me there’s been some buying going on in a pretty controlled fashion.

The RSI is heading towards 60 which suggests there’s still some room for upside. A break above 109.80 could be the trigger for a move towards 114.00 but if we get rejection it could well lead to some consolidation back down towards 104.00.

Trade idea: Buy above 109.80 with the target of 114.00 and a stop loss below 104.00.