Oil and Natural Gas Technical Analysis – Bearish Signals in Oil, Bullish Setup in Natural Gas

WTI crude oil prices declined following bearish supply signals from the US and Saudi Arabia, with WTI consolidating below $66 amid concerns of weakening demand and rising output; Saudi Arabia's cut in July crude prices for Asian buyers to near four-year lows adds to market uncertainty, while global trade tensions exacerbate bearish sentiment by potentially slowing economic growth and reducing oil demand. Natural gas, however, shows bullish price action, consolidating above $3 with potential to reach $5, while the US Dollar Index faces bearish pressure, potentially sliding towards the 90 level if it continues below 98.

Analysis

WTI crude oil is experiencing significant downward pressure, consolidating below the $66 per barrel resistance level, subsequent to bearish supply signals from both the U.S. and Saudi Arabia. U.S. data revealed a larger-than-anticipated increase in gasoline and distillate inventories, suggesting a potential softening of demand in the world's largest oil consumer. Compounding this, Saudi Arabia reduced its July crude prices for Asian markets to levels near four-year lows, shortly after OPEC+ agreed to an output increase of 411,000 barrels per day for July, reflecting an effort by Saudi Arabia and Russia to enforce member discipline and reclaim market share. This confluence of factors, alongside escalating global trade tensions initiated by new U.S. metal tariffs which threaten to slow economic growth and thereby reduce oil demand, has pushed WTI prices towards $62.55 and Brent to $64.60. Technically, WTI's consolidation below its 200-day SMA and within a descending broadening wedge pattern on the 4-hour chart (between $60 and $64) underscores market uncertainty; a break below $60 could trigger further declines, while a move above $70 would be required to signal a bullish shift. Conversely, natural gas exhibits a bullish outlook, consolidating above the $3 mark and having surpassed its 50-day and 200-day SMAs, forming an ascending channel that points towards a potential move to the $5 area. The US Dollar Index is under bearish pressure, having failed to sustain levels above 100.65, with a break below 98 potentially leading to further weakness towards the 96 and possibly 90 levels, ahead of key NFP data.

Key Decisions for Investors

• Investors should exercise caution with WTI crude oil, monitoring the $60 support and $67-$70 resistance levels, as a sustained break below $66 amid rising supply and demand concerns could extend the bearish trend.
• Consider a bullish stance on natural gas, as technical indicators suggest further upside potential towards the $5 area, particularly if it breaks above the $3.80 consolidation level.
• Anticipate continued weakness in the US Dollar Index, which could influence commodity pricing, and closely watch the upcoming NFP data for further directional cues, with key support around the 96 level.