Natural Gas and Oil Forecast: WTI Bounces at $75.93 While Brent Holds $79.90 — NatGas Eyes $3.268?

Energy Markets Eye Normalization After U.S.-Iran Accord

Since June 19, WTI crude, Brent, and the U.S. natural gas market fundamentals have turned as WTI crude and Brent could start to see a supply correction after the signing of memorandum of understanding between U.S. and Iran earlier this week that lifts the naval blockade, the reopening of the strait of Hormuz to commercial traffic and start a 60 day negotiation to solve the wider geopolitical tensions. The closure for commercial vessels resulted in a near total supply disruption of regional crude supplies and over 11 m bpd of crude in the region was idle.

The crude inventory levels which saw heavy draw during the period of supply shortage to satisfy the demand, are the lowest in OECD in more than two decades. With crude supply back online, crude stocks are expected to fill back up with supply replenishment but the time frame depends on when the crude shipments could actually start to resume and other factors which include logistics issues, clearing off mines, technical problems, etc. Though supply was constrained by lower demand in view of higher prices and physical unavailability, demand still remained resilient in some parts of world especially refining activity as seen in some major markets, thus keeping the physical balances tight for crude over the coming weeks.

In the gas segment, market fundamentals have been more resilient as U.S. dry gas production is on growth trend, driven by associated gas production from the crude plays as well by strong LNG demand from the export markets. U.S. storage level are seeing a healthy build, indicating a supply comfort level in the domestic market. While U.S. supplies the largest LNG volume to Europe, shipments to Asia are on the rise, taking the gas from surplus in U.S. markets. Europe and Asia LNG prices which was also affected by the closure, would also benefit from a sustained reopening of strait of Hormuz.

Over the next few weeks, supply recovery will likely continue to remain a key focus and how quickly this is met against global crude storage level outside the region where levels are relatively higher is likely to set the pace of how fast physical demand could recover from the supply disruption. Demand could also pick up across the major economies as central banks could start to react to inflationary pressures from energy prices being back under control.

Natural Gas Futures Hold at $3.204 – Ascending Channel Maintains Bullish Momentum on the 2H Chart

NG natural gas futures are trading at $3.204 on the 2h NYMEX. Mixed candles hold the $3.19 area (red MA) with price still being inside of the blue ascending channel. Bullish rejection wicks from the $3.099 swing low have the buyer control the price action. RSI is at 52 neutral.

The white volume pivot at $3.10 is a key support area with Fib level confluence present with a price target at $3.203 to $3.268. The overall bias is a bullish bias to continue upside with higher highs and higher lows keeping buyers engaged.

Trade Idea: Long $3.204, target $3.268, risk $3.10.

WTI Crude Oil Bounces to $75.93 – Fibonacci 0.236 Support Sparks Recovery on the 2H Chart

WTI is priced at $75.93 on the 2h. Green bullish candles held up the 0.236 Fib level close to $77.69 following the sharp drop below the red 50-period MA around $80.76. Higher lows from the $72.79 swing are being formed as buyer absorbance is present in the red bullish rejection wicks. RSI is holding close to 48 neutral. The white volume pivot area is between $77 and $80.

A white descending trendline from highs caps upside near $80.76. The overall bias is a neutral-to-bullish bias to continue upside in a neutral-to-bullish zone above $77.69 after the recent price correction to the 2h broader channel down-side floor, Fib levels confluence is present for short-term price stabilization with higher lows forming.

Trade Idea: Long $75.93, target $77.72, risk $74.50.

Brent Crude Oil Holds $79.90 – Descending Channel Support Encourages Stabilization on the 2H Chart

Brent is trading at $79.90 on 2h. Mixed candles (green/red candles) tested $78.50 (blue descending channel floor) after rejection at red MA around $85.63. Buyer absorbance on dips is present with bullish rejection wicks having limited downside follow-through.

RSI is at 50 neutral. The white volume pivot is $80 to $82. Price resistance is present near $82.85 to $85.00. The overall bias is a neutral-to-bullish bias to continue upside in the $78.50 to $82.85 neutral-to-bullish zone inside of the larger bearish trend with higher lows keeping buyers engaged.

Trade Idea: Long $79.90, target $82.85, risk $78.50.