Natural Gas, WTI Oil, Brent Oil Forecasts – Oil Dives 4% As Traders Bet U.S. And Iran Will Stop Fighting

Natural Gas Retreats As Storage Build Exceeds Estimates

Natural gas is under strong pressure as traders react to the EIA Weekly Natural Gas Storage report. The report indicated that working gas in storage increased by +61 Bcf from the previous week, compared to analyst forecast of +49 Bcf. The higher-than-expected build triggered a strong sell-off in natural gas markets.

At current levels, stocks are -15 Bcf less than last year and +185 Bcf above the five-year average for this time of the year.

Currently, natural gas is trying to settle below the support at $3.00 – $3.05. In case this attempt is successful, natural gas will head towards the next support level, which is located in the $2.75 – $2.80 range.

WTI Oil Pulls Back As Traders Bet Middle East Fighting Won’t Last Long

WTI oil is losing ground as traders evaluate the impact of escalation between U.S. and Iran.

Recent reports suggest that Iran moved as much as 11 million barrels of oil through the Strait of Hormuz in the last 24 hours. Other vessels decided not to cross the Strait during escalation. The U.S. attacked targets in Iran, while the latter targeted U.S. assets in Gulf countries.

Qatar and Pakistan are ready to provide support as mediators in order to restart negotiations between U.S. and Iran. It remains to be seen whether both countries are ready to talk after attacks.

However, oil traders bet that the sides of the conflict will ultimately get back to the negotiating table. Earlier, President Trump threatened to resume naval blockade of Iranian ports but did not do so. Iran will certainly respond by blocking the Strait of Hormuz in case U.S. imposes the naval blockade.

From a big picture point of view, U.S. and Iran are trying to put pressure on each other by escalating, but the positions of both sides are not changing. That said, both U.S. and Iran would prefer to keep the Strait of Hormuz open, so it’s not surprising to see that traders are ready to bet on de-escalation.

WTI oil failed to settle above the resistance at $74.50 – $75.00 and pulled back towards the support at $70.50 – $71.00. If WTI oil manages to settle below the $70.50 level, it will head towards the next support at $67.00 – $67.50.

Brent Oil Tests The $76.00 Level

Brent oil  pulled back despite escalation in the Middle East. Traders do not believe that U.S. and Iran are ready for another round of war, which will close the Strait of Hormuz.

Brent oil pulled back below the $77.00 level and is trying to settle below $76.00. In case this attempt is successful, Brent oil will head towards the next support, which is located in the $72.00 – $72.50 range.

On the upside, Brent oil needs to settle above the resistance at $77.00 – $77.50 to have a chance to gain sustainable upside momentum in the near term. In this case, Brent oil will head towards the next resistance level at $81.00 – $81.50.

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