Natural Gas and Oil Forecast: WTI Eyes $100 as Geopolitics Heat Up

Market Overview

USOIL is trading in the $95.90-$96.70 per barrel range – an increase of around 1-2% on the day. The fact that the price is holding high is largely down to continued disruptions in the Strait of Hormuz and stalled US-Iran talks – despite mixed signals about a potential de-escalation. Iran’s proposals to mediators seem to be getting nowhere fast and the talks are at a standstill.

The main risk factor here is supply and the fact that a risk premium is built into the price. Meanwhile inventory levels are tightening up. Fundamentally, things are looking pretty good for oil short term – and the EIA is predicting that Brent will peak at around $115 in Q2 before coming back down a bit if flows resume.

Henry Hub is down to around $2.51 to $2.69 per MMBtu – almost at its lowest in 18 months. The fundamentals for gas are looking pretty bearish right now: we’ve got loads of US supply (storage is +7-8% above the 5-year average), a record output, mild spring weather which is reducing gas demand, and large injections. And it gets worse – we’re smack in the middle of the shoulder season which is a time of year when demand is particularly low and we’re left with a load of oversupply.

Oil is getting a boost from geopolitics while Gas is getting hammered by oversupply. Keep an eye out for FOMC (Apr 28-29) and EIA data – those are likely to give us a good idea of what to expect next.

Natural Gas (NG) Forecast: The Breakdown We Were Expecting – What’s Next

Natural Gas is trading near $2.52, having broken cleanly below that key support zone we had around $2.57-$2.60. This breakdown confirms that the downtrend is still firmly in place, and the fact that the price is now trading below both the 50 EMA and 200 EMA doesn’t really help things either – in fact, it makes things look pretty bleak. And the recent candles? – they look pretty bearish – with hardly any sign of buying pressure to speak of, while the RSI is plummeting towards oversold territory.

Yes, a short-term bounce is possible – but the way things are structured at the moment, the outlook still looks pretty bearish.

If the price manages to get below $2.50 then we could see a push towards $2.45 and then $2.37. On the other hand if it manages to get back above $2.60 then the bearish outlook gets turned on its head.

Trade Idea: Sell below $2.55 – then go for $2.40, and put a stop above $2.65.

WTI Crude Oil (USOIL) Price Forecast: Has The Bull’s Eye On $100 Been Set

WTI is currently hovering around $96.60, with a firm grip above the $95.30 support area – a zone that used to be a pretty important demand zone. As it bounces back from $85.30 lows – which weren’t exactly a high-water mark – the price action has been looking pretty solid, with new higher lows regularly spotted within a descending channel, suggesting that we might actually be in the process of a potential reversal.

The 50 day EMA is also being reclaimed by the price as it pushes towards the upper boundary of that channel.

The momentum is really picking up now with the RSI moving up towards 60, so we’re seeing some strengthening of the bullish pressure, but not to the point where we’re getting over-enthusiastic just yet. If we can see a decisive break above $97.80 then we might see a big push to $100.70 and beyond – up to $105.75 in fact. But on the flip-side if the price starts to struggle to stay above $95.30 then we could see a pullback towards $92.00.

Trade Idea: Buy above $97.80 – then target $100.70, and put a stop below $95.00.

Brent Crude Oil (UKOIL) Analysis: The Trendline That Has Been Capping Oil Prices Nears Break

Brent is trading around $101.60, and closing in fast on a key descending trendline that has been a major roadblock to the price since mid-March. As the bounce from $92.50 lows shows, the structure of the price action is slowly beginning to improve, with the price successfully reclaiming both the 50 day EMA and stabilising firmly above the $99.50 support zone.

The main thing that we’re looking at now is that trendline, which will be somewhere in the region of $103.50-$104.00. If the price manages to break above this trendline then that will give a major thumbs up to the bulls, and the price could easily head for $107.30 and $111.50 in the not too distant future. The RSI is still trending up but it’s still short of overbought territory, so the case for a rally still looks solid.

But if the price gets rejected then we might see a retest of $99.50 – and possibly even $96.50.

Trade idea: Buy the breakout above $104.00 – then go for $107.30, and put a stop below $100.00.