Natural Gas, WTI Oil, Brent Oil Forecasts – Oil Soars 6% As Houthis Seize Strategic Red Sea Port

Natural Gas Tries To Rebound

Natural gas attempts to rebound as traders react to the EIA Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by +40 Bcf from the previous week, compared to analyst consensus of +31 Bcf. Interestingly, higher-than-expected build did not put material pressure on natural gas markets.

At current levels, stocks are -79 Bcf less than last year and +148 Bcf above the five-year average for this time of the year.

In case natural gas settles back above the $2.80 level, it will head towards the 50 MA at $2.91. A move above the 50 MA will open the way to the test of the resistance at $3.00 – $3.05.

On the support side, a successful test of the support at $2.75 – $2.80 will push natural gas towards the next support at $2.60 – $2.65. RSI is in the moderate territory, so there is plenty of room to gain momentum in the near term.

WTI Oil Tests New Highs As Houthis Seize Key Port

WTI oil soared as traders focused on Houthis’ advance in Yemen. The militant group managed to defeat Yemen’s government forces in Mokha, a key port on the Red Sea.

The control over Mokha provides Houthis with a great position to attack vessels going through Bab-el-Mandeb Strait.

Therre are no signs indicating that U.S. and Iran are ready to get back to negotiations. I’d note that Houthis are supported by Iran, so the militant group may start attacking vessels in the Bab-el-Mandeb Strait to put pressure on Saudi Arabia and push oil prices higher.

At this point, both key export routes in the Strait of Hormuz and the Bab-el-Mandeb Strait are controlled by Saudi Arabia’s opponents. The country may use the Suez canal, but it would be a logistical nightmare.

Traders also had a chance to take a look at the EIA Weekly Petroleum Status Report. The report showed that crude inventories declined by -0.4 million barrels, compared to analyst forecast of -1.6 million barrels.

Gasoline inventories increased by +1.3 million barrels, compared to analyst consensus of -1.4 million barrels. Distillate fuel inventories increased by +2.1 million barrels from the previous week.

Strategic Petroleum Reserve declined from 286.6 million barrels to 285.4 million barrels as U.S. continued to sell oil from strategic reserves.

Domestic oil production increased from 13.862 million to 13.947 million as oil companies reacted to high prices.

Currently, WTI oil is trying to settle above the resistance at $102.50 – $103.00. In case this attempt is successful, WTI oil will head towards the next resistance level at $109.50 – $110.00. RSI is in the overbought territory, but technical factors may take a back seat as traders focus on geopolitical developments.

Brent Oil Attempts To Settle Above $108.00

Brent oil rallied as traders focused on additional risks to oil supply in the Middle East. Traders bet that the Strait of Hormuz may stay closed for several months, while Houthis may start attacking vessels in the Bab-el-Mandeb Strait. This scenario may push oil prices towards historic highs.

A successful test of the resistance level at $102.50 – $103.00 will push Brent oil towards the next resistance, which is located in the $109.50 – $110.00 range.

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