Natural Gas and Oil Forecast: WTI Under $75 While Brent Tests $77 — NatGas Holds Channel?

Energy Markets Weigh Geopolitical Relief Against Supply Realities.

WTI, Brent and US gas continue to deal with the aftermath of Persian Gulf disruptions as of the 18th June. This is despite some news that the Strait of Hormuz could see some partial reopenings. Production losses remain high, with stockpiles drawn to make up for 10 million bbl of daily lost output from the Middle East; even positive cease-fire news has not helped to alleviate concerns about the physical markets.

However, demand destruction from higher energy prices and economic weakness will provide some counterbalance, with fundamentals remaining tight well into Q3. Refinery runs are holding up reasonably in the US and Asia, indicating that demand from the main regions will stay strong.

Natural gas markets look less uniform, with Henry Hub better supported as production in the US remains strong due to linked gas production. Storage remains well stocked and LNG exports provide additional outlet for supply. Europe and the Asian benchmarks face more challenges in the face of logistical difficulties to transport alternative supplies; additionally the energy shock is likely to have increased weather sensitivity in power demand.

In all three markets, the next few weeks will provide a good test in terms of whether geopolitical solutions can return flows faster than drawdown can offset them, or if tight supply will support prices due to a continued tight balance in Q3 with OPEC+ discipline and weak non-OPEC supply growth. A BoE decision yesterday and potential Fed guidance to be released tomorrow, which will likely be focused on the inflation outlook, will influence demand expectations in the global economy.

Natural Gas Futures Hold at $3.152 – Ascending Channel Support Maintains Bullish Bias on the 2H Chart

Natural Gas is at $3.152 on the 2-hour NYMEX chart, and price action remains supported by the lower boundary of an ascending channel after it consolidated around 50MA. Mixed candles indicate that buyers are defending support at the 3.12 to 3.15 range after recent pullback off the high at $3.26.

The RSI has now settled back to near neutral, at 50, after cooling back off the overbought area in the morning session. Resistance is at 3.203, 3.268, 3.324, and support at 3.121, 3.073. In terms of price action, as we can see, it still has a bullish structure as long as it stays above the floor of the channel, which means that higher lows are still being confirmed.

Trade Idea: Buy at $3.152, targeting $3.203, with a stop-loss below $3.121.

WTI Crude Oil Slides to $74.02 – Triangle Breakdown Accelerates Bearish Momentum on the 4H Chart

WTI Crude Oil is at $74.02 on the 4-hour timeframe, as it continues to extend its losses after breaking below a large symmetrical triangle, and 50MA. A number of strong, continuation red candles have pushed it back down below key support at $86.05, $79.54, so it seems to be more aggressive. The RSI is also back near oversold conditions, indicating a persistent sell pressure.

Looking at the volume profile, the level at $79 to $86 has turned into major supply now, after previously acting as a strong support level. All in all, as we saw it remains below the 50MA, and it has a bearish structure with a number of lower lows and lower highs, so we will see sellers remain firmly in control.

Trade Idea: Sell at $74.02, targeting $69.50, with a stop-loss above $76.00.

Brent Crude Oil Falls to $77.74 – Descending Channel Breakdown Signals Further Weakness

Brent Crude Oil is at $77.74 on the 4-hour timeframe, as it continues to trade inside a big descending channel, and as a result of breaking below the lower boundary, is accelerating to the downside, pushing it down below key support at $83.17. The RSI is close to the oversold, and this is a clear indicator that we have a strong bearish momentum.

In addition, we saw a number of strong red candles on the 4-hour chart, indicating that the selling pressure is persistent. On the volume profile, the support now seems to have been turned to supply, which makes it clear that the resistance area starts around $83.17, and also the resistance area from the lower boundary of the channel. It should be mentioned that it has a strong bearish structure with a number of lower highs and lower lows, as it remains below the 50MA, and all this points towards sellers remaining in control.

Trade Idea: Sell at $77.74, targeting $75.96, with a stop-loss above $80.00.