Oil and Natural Gas Technical Analysis: China Sets the Price Floor as WTI Remains Bearish

In 2025, China replaced OPEC+ as the leading force stabilising crude oil prices. While producers held output steady, China actively managed its imports and stockpiles. When prices fell, China increased crude purchases. When prices rose, it reduced them. This behaviour set an effective floor and ceiling, keeping Brent crude oil (BCO) in a tight range around $65 per barrel.

China built a large surplus of nearly 1 million barrels per day by late 2025. This stockpiling began after a drawdown in early 2025 and intensified when prices dipped. The data shows a clear pattern as China buys aggressively when oil is cheap. For example, in November, the surplus surged to 1.88 million bpd after prices fell from the June spike. This demand helped absorb excess global supply and reduced downside pressure on prices.

If storage hits capacity, China may slow its buying, removing the current price floor. That could lead to sharp declines if global supply remains high. Oil traders now watch Beijing more than Vienna to gauge future price moves.

WTI Crude Oil Technical Analysis

The daily chart for WTI crude oil (CL) shows a rebound from the long-term support near the $55 region. The price is now approaching the 50-day SMA at around $59. As long as the price stays below the $60 level, the risk of continued downside remains high. Overall, the broader trend still appears bearish, awaiting confirmation of the next move. A decisive break below $55 would signal a deeper decline in oil prices.

The 4-hour chart for WTI crude oil highlights immediate resistance at $59.50, reinforced by a descending red trendline originating from the October 24 highs. As long as the price remains below the $62 level, the bearish momentum is likely to persist. A break below $55 would confirm renewed selling pressure and could trigger a significant drop in oil prices.

Natural Gas Technical Analysis

The daily chart for natural gas (NG) shows a sharp pullback after reaching a high of $5.49. The price has retreated to the strong support zone between $3.80 and $4.00, as marked by the black dotted trendline. Despite the correction, the broader outlook remains strongly bullish, supported by a well-defined bullish price structure on the daily timeframe.

However, a break below $3.50 would signal a potential trend reversal and could lead to a further drop toward the $2.60 level. On the upside, a clear break above $4.50 would confirm renewed bullish momentum, opening the path toward $5.50.

Additionally, the 50-day SMA remains above the 200-day SMA and continues to slope upward, reinforcing the presence of positive momentum in natural gas prices.

The 4-hour chart for natural gas shows a pullback after forming a high near $5.50, with price retracing to establish a strong bottom and test key support levels. The price has reached the $3.80 level, which acts as a short-term support zone in the current structure.

A break below $3.80 could trigger further downside toward the $3.50 level. On the other hand, a clear break above $4.70 would signal renewed upside momentum and open the path for a bullish continuation in natural gas prices.

US Dollar Index Technical Analysis

The daily chart for the US Dollar Index shows that the index remains under bearish pressure, trading below both the 50-day and 200-day SMAs, and is now approaching the 98.00 level. A break below 98.00 would likely trigger a significant decline toward 96.50.

Moreover, a further breakdown below 96.50 would open the door to additional downside, with the next significant support seen near the 90.00 level. The overall trend remains bearish, with no signs of reversal at this stage.

To shift momentum to the upside, the index would need to break above 100.50, which could signal the start of a potential bullish reversal.

The 4-hour chart for the US Dollar Index shows the formation of a double top pattern near the 100.50 resistance, with the index continuing to trend lower. The nearest short-term support is at 97.50, and the price remains on track to test the 96.50 level in the coming days.