Natural Gas, WTI Oil, Brent Oil Forecasts – Oil Rallies As Traders Bet On A Long War

Natural Gas Rallies As Traders Focus On European Prices

Natural gas gained ground as traders focused on the huge rally in the European natural gas markets.

Natural gas prices in Europe are going through the roof amid supply disruptions. The Strait of Hormuz remains closed, while the key LNG export plant in Qatar was shut down after a drone strike.

U.S. and Israel continue to deliver strikes against Iran, while the latter targets countries that host U.S. military bases, including Oman, Bahrain, Qatar, UAE, and Saudi Arabia. According to recent reports, UAE is thinking about hitting back at Iran after recent attacks.

Geopolitical uncertainty and military action triggered a strong rally in the European natural gas markets. Demand for U.S. LNG will certainly increase, which is bullish for natural gas prices in the U.S.

Currently, natural gas is trying to settle above the resistance at $3.00 – $3.05. In case this attempt is successful, natural gas will move towards the resistance level at $3.25 – $3.30.

WTI Oil Tests New Highs As Rally Continues

WTI oil rallied again as traders evaluated the impact of the war in the Middle East.

China, which is the key consumer of Iranian oil, has recently urged all sides to provide safe passage of vessels through the Strait of Hormuz. This plea fell on deaf ears.

Iran believes that attacks on oil-related facilities and the closure of the Strait of Hormuz are its key cards in the battle, as it cannot compete with the U.S. and Israel in military power.

Traders have started to price in a possibility of a long war in the Middle East. Interestingly, Iranian oil assets were not hit by strikes, which means that U.S and Israel do not want to see oil prices going above the $100 level.

However, military conflicts have a tendency of going out of control, so the market does not rule out additional escalation which could push oil prices towards new highs.

WTI oil made an attempt to settle above the resistance at $74.50 – $75.00 but lost momentum and pulled back as traders have started to take profits after the strong rally. In case WTI oil settles back above $75.00, it will move towards recent highs near the $78.00 level.

Brent Oil Soars As Strait Of Hormuz Remains Closed

Brent oil rallied amid war in the Middle East. Traders focus on supply disruptions and bet that the Strait of Hormuz will remain closed in the near term.

The potential duration of the conflict is the key driver for Brent oil. In case military action were to stop tomorrow, oil prices would quickly drop.

In case the conflict lasts for weeks, the market would be seriously disrupted. Some countries would run out of storage and would be forced to start closing oil fields, which would have to be restarted when the conflict ends.

Brent oil has also pulled back from session highs as traders took some money off the table. If Brent oil settles back below the $81.00 level, it will move towards the nearest support, which is located in the $78.50 – $79.00 range. It remains to be seen whether oil has any chance to gain downside momentum during the war in the Middle East as risks of additional escalation would always be present.

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