Oil and Natural Gas Technical Analysis as Economic Data Boosts Market Sentiment

Oil prices rebounded on Thursday following stronger-than-expected economic data from major oil consumers. Brent oil (BCO) and WTI crude oil (CL) prices increased as traders responded to signs of improving global demand. Moreover, the easing trade tensions also helped boost market sentiment and reverse the previous session’s losses.

US crude inventories dropped sharply by 3.9 million barrels, signaling increased refinery activity and a tightening of the supply. This larger-than-expected drawdown reflected growing domestic demand. However, gains were limited by rising gasoline and diesel stockpiles, which suggest potential headwinds in refined product demand.

On the other hand, China’s economic data also supported oil prices. Crude throughput in June jumped 8.5% year-over-year, pointing to stronger consumption. Moreover, the positive developments on US-China trade, along with progress on deals with India and Europe, lifted market confidence. These combined factors hint at continued upside for oil in the near term.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – High Volatility

The daily chart for WTI crude oil shows bearish price action below the 200-day SMA. The geopolitical crisis in the Middle East has triggered heightened volatility in crude oil prices. Despite the fluctuations, the price remains below the 200-day SMA, indicating a continued bearish trend. Therefore, the rebound in the oil prices due to improved economic sentiment might be limited.

A break below the $66 level, followed by a close below $64, would signal further downside potential. Ongoing geopolitical uncertainty keeps oil prices directionless. A decisive break above the $77 level is needed to shift the trend to the upside.

WTI Oil 4-Hour Chart – Double Top Amid Economic Signals

The 4-hour chart for WTI crude oil shows that the price is trading within a descending broadening wedge pattern. A breakout above the wedge, followed by a double top near the $77 area, failed to hold. As a result, the price has remained within the pattern and is consolidating around the $64 and $66 levels. A break below $64 would signal further downside in WTI crude oil prices.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Multiple Ascending Channel

The daily chart for natural gas (NG) shows that the price remains in a strong bullish trend. The formation of multiple ascending channels above the neckline of the cup-and-handle pattern suggests further upside. The repeated bottoms near the $3 level indicate that the next move may be higher. A break above the $5 level is needed to gain additional momentum. However, the price is currently approaching the $4 level, which acts as resistance from the red ascending channel on the daily chart.

Natural Gas 4-Hour Chart – Consolidation

The 4-hour chart for natural gas indicates that the price is consolidating between the $3 and $4 levels, forming a bullish price structure. As long as the price stays above the $2.90 level, the trend remains upward, and the next move is likely to be to the upside. A break above the $4.70 level would be a bullish signal, indicating further upside in natural gas prices.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Rebound

The daily chart for the US Dollar Index displays strong bearish price action, forming a head-and-shoulders pattern. However, a rebound from the long-term support at 96.50 has pushed the index toward the resistance at the 50-day SMA. A break above 99 would signal further upside toward the 100.50 area. Conversely, a break below 96.50 would indicate further downside toward the 90 level.

US Dollar 4-Hour Chart – Breakout from Descending Channel

The 4-hour chart for the US Dollar Index shows that the price has broken above the descending channel, initiating the next move to the upside. The immediate resistance near the 99 area aligns with the 50-day SMA on the daily chart. However, strong resistance lies at the 100.50 level. A break above 100.50 would take the index toward the 102 area.