Natural Gas, WTI Oil, Brent Oil Forecasts – Crude Prices Dip Amidst US, China Demand Concerns

By:

James Hyerczyk

Published: Mar 8, 2024, 18:14 GMT+00:00

Key Points:

Oil prices decline due to concerns over Chinese demand.
OPEC+ maintains output cuts, impacting global oil supply.
Uncertain global demand weighs on Brent and WTI prices.

Natural Gas

Daily Natural Gas

Natural Gas futures are trading nearly flat at the mid-session on Friday after recovering from earlier weakness. Based on the short-term range of $1.607 to $2.009, the price action suggests traders were reacting to a test of its 50% to 61.8% retracement zone.

The fundamentals are bearish, but the technical chart pattern has been looking potentially bullish since the February 20 bottom. That was the day that oil producers started announcing production cuts for 2024.

Crude Oil

Oil prices witnessed a decrease this week, influenced by ongoing concerns about Chinese demand and extended output cuts by OPEC+. Both Brent and WTI are trending towards a weekly fall, with the market closely monitoring supply and demand factors.

Supply Factors and OPEC+ Strategy

Tight oil supplies were a key factor this week, primarily due to OPEC+ sustaining its production reductions and the impact of Russian sanctions on exports. OPEC+, led by Saudi Arabia and Russia, agreed to continue their oil output cuts of 2.2 million barrels per day into the next quarter, aiming to stabilize the market in the face of global growth worries and increased production outside the group.

Demand Uncertainty and Market Response

Demand projections remain uncertain, contributing to the price drop. China’s oil demand is showing signs of lagging, and the anticipated increase in U.S. driving season demand has not yet materialized. Brent and WTI experienced declines of 0.6% and 1.3% respectively over the week. Markets are particularly cautious about China’s demand, despite its 5% economic growth target for 2024, viewed by many as ambitious without significant extra stimulus.

U.S. Economic Indicators and Interest Rate Prospects

In the U.S., job growth exceeded expectations with 275,000 new nonfarm payrolls in February. However, an uptick in the unemployment rate and slower wage growth hint at a potential slowdown in the economy. This scenario keeps alive the prospect of a June interest rate cut by the Federal Reserve. A reduction in interest rates could boost oil demand by stimulating economic growth.

European Central Bank (ECB) Policies

In Europe, the ECB is anticipated to start lowering interest rates sometime between April and June, as indicated by ECB policymaker Francois Villeroy de Galhau. This development could also affect global oil demand.

Market Forecast

The short-term outlook for the oil market seems bearish. While supply constraints and geopolitical issues are limiting factors, the uncertain demand from key players like China and the U.S. weighs on the market. The potential for interest rate reductions in the U.S. and Europe could provide some support, but overall, the market sentiment is cautious.

WTI Crude Oil

Daily Light Crude Oil Futures

The long-term trend is up for light crude oil futures but momentum is dropping. This could lead to a test of the 200-day moving average at $76.83. A failure to hold this indicator will change the long-term trend to down with the 50-day moving average at $75.20 the next target.

On the upside, a trade through $80.85 will signal a resumption of the uptrend.

Brent Crude Oil

Daily Brent Crude Oil

Brent crude oil is staddling the 200-day moving average at $82.10, putting it in a position to change the longer-term trend to down. If this move creates enough downside momentum then look for the break to continue into the 50-day moving average at $80.26. On the upside, a trade through $84.06 will signal a resumption of the uptrend.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.