Oil and Natural Gas Analysis as OPEC+, Economic Uncertainty, and US Dollar Shape Sentiment

Oil prices dropped for a third straight day, hitting their lowest levels in months as fears over the U.S. government shutdown weighed on the global economy. Brent oil (BCO) trades below $66 while WTI oil (CL) consolidates around $62. The shutdown raised concerns over slower growth and weaker demand, with traders already cautious about consumption trends in the U.S. and Asia.

Moreover, the outlook for supply added further pressure. The expectations that OPEC+ may raise production by up to 500,000 barrels per day in November fueled bearish sentiment.

Although OPEC denied those reports, talk of higher output combined with falling gasoline prices highlighted the risk of oversupply. U.S. shale producers also warned that prices near $60 could halt production growth, underscoring the fragile balance in the market.

The EIA reported a build of 1.792 million barrels, larger than expected, following softer exports. This surprise increase highlights concerns about excess supply at a time of shaky demand. With stocks up, OPEC+ debating output, and the U.S. shutdown hurting the outlook, oil stays weak and may hold near recent lows unless demand improves.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – Bearish Pressure

The daily chart for WTI crude oil shows that the price has broken below the $64 area after testing the 200-day SMA. This breakdown signals that prices are likely to trend lower.

However, immediate support remains at the $60 area, and a break below this level could trigger another sharp decline in oil prices. The RSI remains below the mid-level, while the price stays under the 200-day SMA, indicating further downside potential.

WTI Oil 4-Hour Chart – Consolidation with Negative Bias

The 4-hour chart for WTI crude oil shows that the price has been consolidating within the $60 to $62 range after failing to break above the $65.50 level. This indicates that oil remains in a consolidation phase with a bearish bias. A break below $60 would likely trigger a strong drop in prices.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bullish Momentum

The daily chart for natural gas shows that the price has found strong support at the neckline of the cup-and-handle pattern. This neckline meets around the $2.50 to $2.60 level. The rebound from this neckline has lifted the price toward the 200-day SMA. A break above this level would confirm a strong bullish trend.

The formation of the cup-and-handle pattern, followed by the rebound from $2.50 support, suggests that natural gas prices are likely to continue moving higher.

Natural Gas 4-Hour Chart – Positive Trend

The 4-hour chart for natural gas shows that prices are approaching the $3.50 to $3.60 level. This resistance comes from the black dotted trendline originating from the March 2024 highs and is also validated by the 200-day SMA on the daily chart. A break above the $3.60 level would likely initiate a strong rally toward the $4.70 area.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Breakout of Bear Flag

The daily chart for the USD Index shows that the index has hit the resistance of the bear flag pattern and moved lower. The strong consolidation below the 50-day SMA indicates that the index will likely remain range-bound while waiting for direction.

A break below the long-term support at 96.50 would extend the downside, while a break above 100.50 would neutralize the bearish trend and push the index higher.

US Dollar 4-Hour Chart – Negative Price Action

The 4-hour chart for the USD Index shows strong consolidation below the 98.60 level. The index has been moving within the 96.50 to 100.50 range. A breakout above or below these levels is required to determine the next direction.