Oil and Natural Gas Technical Analysis: Crude Falls on Supply Surge, Gas Eyes Bullish Rebound

Oil prices dropped on Monday as traders focused on a looming oversupply. Brent crude oil (BCO) consolidated around $66.50 per barrel, while WTI crude oil (CL) hovered near $62.50. Despite ongoing geopolitical risks in Russia and the Middle East, the market remained fixated on rising output. Iraq increased exports and expects continued high volumes in September. Meanwhile, Kuwait reported its highest production capacity in over a decade, reaching 3.2 million barrels per day. This growing supply outlook pushed prices toward the lower end of their recent trading ranges.

Traders expect oil demand to weaken in Q4 2025 and early 2026. If China does not absorb the surplus through stockpiling, prices may decline further. The U.S. Federal Reserve’s stance also adds pressure, as officials signalled fewer rate cuts ahead, potentially limiting future economic growth and energy consumption.

Moreover, geopolitical tensions in the Middle East and Eastern Europe are influencing the oil market. Recent developments, such as the recognition of Palestine and Russian airspace violations, may add to volatility in the energy sector. Additionally, Iraq may soon resume Kurdish oil exports via Turkey, contributing further to global supply.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – Ascending Channel

The daily chart for WTI shows that the price failed to break above the 50-day SMA and continues to consolidate at the strong support of the ascending channel. Immediate support remains at the $60 level, and a break below this could trigger a decline toward the $55 region. The RSI remains below the 50 mark, indicating continued bearish pressure on oil prices.

WTI Oil 4-Hour Chart – Consolidation with Negative Bias

The 4-hour chart for WTI crude oil also shows a negative bias within a strong consolidation range. Prices are approaching the $61.60 level, and a break below this support could push WTI lower. As long as the price remains below the $70 region, the outlook for WTI crude oil is likely to remain bearish.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bullish Construction

The daily chart for natural gas (NG) shows that prices initiated a rebound from the long-term support at $2.60 and reached the 50-day SMA. However, the price failed to break above the 50-day SMA and dropped back toward the long-term support zone.

This support aligns with the neckline of the cup-and-handle pattern formed in 2024. If natural gas holds support near the $2.50 level, the next move is likely to be higher. A breakout above $3.50 would trigger a strong rally in natural gas prices.

Natural Gas 4-Hour Chart – Bullish Construction

The 4-hour chart for natural gas shows that prices failed to break above $3.18 and are now moving back toward the long-term support at $2.60. A break below $2.50 would trigger a further decline in natural gas prices. However, if the price finds support in the $2.50–$2.60 range, a rebound toward the $3.50 level is likely.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Breakout of Bear Flag

The daily chart for the US Dollar Index shows a rebound from the long-term support at the 96 level, followed by a failure to break above the 50-day SMA. The reversal from the 50-day SMA suggests that the next move is likely to be lower.

The index is consolidating at long-term support, indicating bearish price action. A break below the 96 level would likely trigger a substantial decline in the US Dollar Index to 90 level.

US Dollar 4-Hour Chart – Negative Price Action

The 4-hour chart for the US Dollar Index shows strong consolidation below the 98.60 level. This consolidation reflects negative price action, and a break below 96.50 could trigger a sharp decline in the index.