Natural Gas, WTI Oil, Brent Oil Forecasts – Oil Retreats 4% On Profit-Taking

Natural Gas Attempts To Settle Below $2.85

Natural gas made an attempt to settle above the $2.95 level but lost momentum and pulled back towards the $2.85 level. Yesterday’s EIA report, which indicated that working gas in storage increased by +32 Bcf from the previous week, failed to provide support to natural gas prices.

In case natural gas settles below the $2.85 level, it will head towards the nearest support, which is located in the $2.75 – $2.80 range. A move below the $2.75 level will provide natural gas with a chance to gain additional downside momentum. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

WTI Oil Moves Lower Amid Profit-Taking

WTI oil pulls back as traders take some profits off the table after the strong rally and focus on mediators’ efforts to push U.S. and Iran back to negotiations.

According to recent reports, China, Qatar and Pakistan are trying to find ways to implement ceasefire. It should be noted that neither U.S. nor Iran have shown any appetite for ceasefire.

U.S. is trying to reduce Iran’s ability to attack vessels in the Strait of Hormuz. Control over the Strait of Hormuz was the key point in negotiations. Five months after the start of events in the Middle East, the sides have not seriously discussed Iran’s nuclear program, which was the original reason for the military operation.

President Trump has recently said that he could make a decision to make U.S. attacks “bigger than ever before”. Meanwhile, Iran continued to target U.S. bases in the region.

It remains to be seen whether U.S. and Iran are ready to negotiate in the near term. The situation looks like a stalemate, and both sides may choose escalation as a way to improve their positions.

WTI oil failed to settle above the resistance level at $91.50 – $92.00 and pulled back towards the $89.00 level. In case WTI oil settles below $89.00, it will head towards the nearest support level, which is located in the $86.00 – $86.50 range.

On the upside, a successful test of the resistance at $91.50 – $92.00 will push WTI oil towards the next resistance level at $96.50 – $97.00.

Brent Oil Pulls Back From Monthly Highs

Brent oil has also moved lower amid profit-taking. The pullback is a healthy development after the strong rally. The geopolitical situation remains bullish for oil markets as U.S. and Iran may struggle to find ways out of the current cycle of escalation. Meanwhile, the Strait of Hormuz is de-facto closed by Iran while the Bab al-Mandab Strait is controlled by the Houthis.

If Brent oil declines below the support at $95.00 – $95.50, it will move towards the $91.00 level. On the upside, Brent oil needs to settle above the resistance at $100.00 – $100.50 to have a chance to gain upside momentum in the near term. In case Brent oil climbs above the $100.50 level, it will head towards the next resistance at $105.50 – $106.00.

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