Natural Gas and Oil Forecast: Tariff Risk and Surplus Outlook Cap Upside

Oil prices saw a modest rebound, with Brent up 0.1% to $68.68, following a U.S.-Japan trade agreement, yet remain significantly down year-to-date. Analysts anticipate continued pressure on oil from tariff risks and an expected supply surplus, though low inventories offer some cushion. Meanwhile, both WTI and Brent crude, alongside natural gas futures, face sustained bearish technical momentum as key resistance levels and downward-sloping EMAs cap upside.

Analysis

The energy market is exhibiting a clear divergence between a minor, news-driven daily rebound and a more entrenched bearish medium-term outlook. While Brent crude rose a marginal 0.1% to $68.68 and WTI hovered near $65.20 on a U.S.-Japan trade agreement, these gains are set against significant year-to-date declines of 8% and 8.85%, respectively. According to analysis from ING, the fundamental picture remains weak, weighed down by persistent tariff risks and an expected shift to a supply surplus later this year. However, this bearish view is tempered by the observation that relatively low global inventories could provide a stabilizing cushion for flat prices. The technical picture across energy futures reinforces a negative bias. Natural gas futures remain under pressure near $3.233 after a firm rejection from the $3.368 resistance, with downward-sloping 50-day and 100-day EMAs confirming sustained bearish momentum. Similarly, WTI crude is in a defined bearish channel, trading below its 50-EMA ($66.03) and 100-EMA ($66.50). Brent crude is consolidating within a symmetrical triangle, capped by resistance near $69.00, indicating a short-term neutral-to-bearish stance pending a breakout.

Key Decisions for Investors

• Investors should closely monitor global inventory data, as ING's analysis suggests low inventories could provide a crucial cushion against the bearish fundamental pressures of a looming supply surplus and trade tariff risks.
• The technical posture for WTI (USO) and Natural Gas (UNG) is decidedly bearish, suggesting caution for long positions; a break below key support at $64.89 for WTI or $3.218 for Natural Gas would reinforce the case for short-side exposure.
• Given Brent's (BNO) consolidation within a symmetrical triangle between support at $68.21 and resistance near $69.00, it is prudent to await a decisive breakout before establishing new directional positions.
• The minor price lift from trade news highlights sensitivity to geopolitical headlines, so investors should maintain disciplined risk management to hedge against short-term volatility that could run counter to the dominant bearish trend.