Natural Gas and Oil Forecast: WTI Stalls at $98 While Brent Awaits Triangle Breakout

Market Overview

Geopolitical tensions are running high with US-Iran peace talks stuck in neutral – which basically means the Strait of Hormuz remains largely shut down. This is a big deal since it handles roughly 20% of the worlds oil supply, and the consequences are being felt. Because of the lack of oil getting through the strait, shipments are getting delayed and drilling operations are having to be shut down.

As a result US energy exports are setting records as the industry tries to reroute supplies to where they’re needed. Meanwhile, a quick look at the inventories shows draws being made as the reduced Middle East oil flow puts extra pressure on supplies.

The US energy market is still looking a bit soft right now, partly because its in the shoulder season – which is the period between the real cold of winter and the peak of summer demand. We’re also seeing some mild spring weather which has reduced heating demand while at the same time allowing for strong storage injections. As a result, inventories are way above seasonal norms – they’re about 8% higher than we’d normally see at this time of year.

Production has actually eased up a bit in response to the low prices, but US LNG exports are still going strong and are near record levels. When you take a look at overall supply and demand, it points to a comfortable supply cushion going into summer – and we’re not expecting to see any big jumps in demand driven by weather in the near future.

Natural Gas Taking a Nosedive At $2.71 – Getting Ready To Break Down

Natural Gas is currently sitting at $2.716, sliding away within a descending channel. And the candlesticks – they’ve got lower highs and bearish closes telling us that yes, the pressure is on. We’ve got a key support level at $2.672 and resistance up at $2.806.

RSI at 42 is saying that the bearish momentum is going strong but we’re not over-sold yet. If we look at the Fibonacci retracement from $3.065 to $2.568 then we can see that $2.806 is the level we’re bumping up against.

Moving averages are sloping downwards reinforcing that bearish bias. Break below $2.672 and it’s possible that we could drop all the way down towards $2.600.

Trade idea: Sell when we break below $2.67 – and your stop is at $2.81.

WTI Crude Oil Price Still Struggling To Rise Above $98

WTI Crude Oil closed at $98.30 just shy of that intraday peak of $98.85. The candlesticks are showing a resistance sign – there’s an upper wick telling us there’s some supply holding things back at around the $98 to $100 mark. The descending channel has finally been broken but unfortunately the price is still having a very hard time getting above that 200-day moving average.

Now if we look at the Fibonacci retracement from $115 to $70, we can see that the 0.618 level lines up right with the current resistance at $98 – no coincidence there. The RSI at 55 is telling us there’s a bit of momentum going, not enough to get overly excited though.

We’ve got support at $95.38, and if – when – we break through $100.68 then $105.75 is a possibility. Trade idea: Buy only if the daily close stays above $100 – set your stop at $95.30.

Brent Crude Oil Sits Tight Around $103 – A Triangle Setup

Brent is at $103.72 – wedged between $99.51 and $107.28. The candlesticks are looking pretty indecisive with small bodies and the whole symmetrical triangle formation – we’re waiting for a breakout confirmation here. RSI at 48 is just sitting pretty telling us that there’s not a lot of momentum one way or the other.

Volatility will be higher when the trendlines meet at $104 and the Fib retracement from $111.58 high to $92 low is telling us that $103 is the equilibrium in the middle of all this.

A close above $107.28 and $111.58 is suddenly in our sights. Break down below $99.51 and we are staring at a possibility of $96.00.

Trade idea: Sell if we break down under $99.50 – stop at $103.80.