Oil and Natural Gas Analysis: Trade Optimism Lifts Prices Amid Bearish Technicals

Oil prices bounced back on Monday after news confirmed that President Trump would meet with President Xi later in October. This assurance helped reverse Friday’s steep losses when crude dropped to five-month lows. Brent oil (BCO) increased to $63.30, while WTI crude oil (CL) also climbed to $59.50. Despite this rebound, the overall trend in the oil market remains bearish.

The de-escalation between China and the U.S. helped calm the markets. However, the next direction for oil depends heavily on the outcome of the upcoming trade summit. Strong Chinese crude imports and steady OPEC demand forecasts supported the price floor. Still, hopes for Middle East peace reduced risk premiums. Traders remain cautious, waiting for a lasting ceasefire before factoring in geopolitical stability.

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 ascending channel pattern near the $64 area and continues to move lower. A break below $60 has triggered renewed selling pressure. This pressure may push prices toward the $55.50 level. The 50-day SMA remains below the 200-day SMA, indicating further downside potential in the coming days and weeks.

Despite the breakout seen on the daily chart at $60, the long-term weekly chart below shows that oil prices remain within a significant support zone. A decisive breakout will occur only if the price falls below the $55 level. A break below this area could trigger intense selling pressure in oil prices.

WTI Oil 4-Hour Chart – Negative Price Action

The 4-hour chart for WTI crude oil shows that the price failed to break above the $65.50 level and has fallen below $61.60, indicating a strong breakout to the downside and renewed selling pressure in oil prices.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Resistance at 200-Day SMA

The daily chart for natural gas (NG) shows that prices are consolidating between the 50-day and 200-day SMAs despite the formation of a double bottom pattern. The price has broken below the $3.16 level, and the RSI remains below the midpoint, indicating bearish momentum.

However, the price continues to fluctuate within the $3 to $5 range, reflecting ongoing uncertainty. A breakout above $3.60 could trigger renewed buying pressure toward the $5 level.

Natural Gas 4-Hour Chart – Rebound

The 4-hour chart for natural gas shows that the price is declining after hitting resistance between the $3.50 and $3.60 levels, moving back toward the $2.90 area. The black dotted trendline remains a key resistance level, and as long as the price stays below $3.50, natural gas remains in a consolidation zone.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Consolidation

The daily chart for the U.S. Dollar Index shows a rebound from the long-term support at 96.50, with the index moving toward the 100.50 level. However, as long as it stays below the 101 level, the downtrend may continue. Despite the dollar’s rebound, gold (XAU) prices are surging higher due to strong safe-haven demand driven by the trade crisis.

US Dollar 4-Hour Chart – Consolidation

The 4-hour chart for the U.S. Dollar Index shows a rebound after forming an inverted head and shoulders pattern. The formation of this pattern at the long-term support near the 96.50 level indicates positive short-term development. This positive development may push the index towards 100.50. However, as long as the index remains below 100.50, the broader downtrend is likely to continue.