Oil and Natural Gas Technical Analysis Amid Inventory Drop and Trade Optimism

Oil prices consolidate in wide ranges as hopes for smoother US trade negotiations lifted sentiment. WTI crude oil (CL) lifted from the Wednesday low of $64.76, while Brent crude oil (BCO) rebounded from the Wednesday low of $68.32. The recent tariff deal with Japan and potential progress in US-EU talks eased investor concerns. This optimism supported crude markets despite broader geopolitical tensions.

At the same time, US crude inventories dropped more than expected. The Energy Information Administration reported a 3.2 million-barrel decline, far above forecasts, as shown in the chart below. This sharp inventory draw signalled a tightening of supply, adding further support to prices.

However, upside remains capped by global risks. Uncertainty over US-China trade talks and unresolved tensions between Ukraine and Russia weigh on sentiment. Sanctions on Russian oil and port disruptions in the Black Sea add to market volatility, keeping crude within a cautious trading range.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – Negative Trend

The daily chart for WTI crude oil shows that the price remains under bearish pressure and is attempting to break below a key triangle pattern. The price is consolidating within a long-term support range between the $64 and $66 area. A break below the $64 level would signal further downside risk.

WTI crude remains below both the 50-day and 200-day SMA, reinforcing the bearish outlook. The sharp drop from the $77 level during the US–Iran conflict has pushed price action into negative territory, increasing uncertainty and downside risk for WTI crude oil.

WTI Oil 4-Hour Chart – Double Top Formation

The 4-hour chart for WTI crude oil indicates that the price is consolidating within a descending broadening wedge, situated between the $66 and $64 areas. As long as the price remains below $70, WTI crude oil is likely to continue its downward trend. The emergence of a double top near the $77 level further reinforces the bearish outlook and suggests additional downside risk.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Consolidation

The daily chart for natural gas (NG) shows that the price has broken below the 200-day SMA, initiating a downward trend. The formation of multiple peaks near the $5.00 and $4.00 levels has added to the bearish pressure. Strong support remains at the $2.70 level, and as long as this support holds, natural gas prices may rebound higher.

Natural Gas 4-Hour Chart – Consolidation

The 4-hour chart for natural gas shows that the price is consolidating between the $2.90 and $4.70 levels. However, the daily chart highlights strong support at the $2.70 area. The price is attempting to break lower, but as long as the $2.70 support holds, a rebound in natural gas prices remains likely.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Bearish Pressure

The daily chart for the US Dollar Index shows that the index remains under bearish pressure after rejecting the 50-day SMA. This suggests a likely break below the 96 level, which could trigger a further downward trend. The RSI is also trading below the 50 mark, reinforcing the bearish momentum.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that the index is trading within a descending channel and is attempting to retest the channel boundary. A confirmed break below the 96 level could trigger a strong bearish move, potentially targeting the 90 level.