(Technical Analysis) Natural Gas and Oil Outlook: Hurricane Francine Heightens Supply Fears, Markets React

Natural Gas and Oil Outlook: Hurricane Francine Heightens Supply Fears, Markets React

Key Highlights:

• Hurricane Francine disrupts 24% of U.S. oil and 26% of natural gas production, creating immediate concerns over global energy supplies.
• OPEC+ revises its 2024 oil demand growth forecast, reducing it from 2.11 million barrels per day to 2.03 million.
• S. crude oil stockpiles dropped by 2.793 million barrels, temporarily lifting prices despite a broader bearish trend.

Market Overview

Oil prices rebounded modestly on Wednesday following significant declines, as Hurricane Francine led to the closure of nearly a quarter of U.S. crude oil production and over a quarter of natural gas output in the Gulf of Mexico. This caused fresh concerns about supply disruptions, even as global demand remains under pressure following OPEC+’s downward revision of demand growth forecasts.

U.S. crude inventories also saw a notable decline, boosting prices slightly. However, economic concerns in major markets like China and the U.S. continue to loom over the energy sector, maintaining a volatile environment for oil and natural gas.

Natural Gas Price Forecast

Natural Gas (NG) is currently trading at $2.236, showing minimal movement but signalling a potential shift. A cluster of Doji candles, positioned above the pivot point at $2.22, suggests uncertainty, yet indicates that an upward trend could emerge if buying pressure increases.

Key resistance levels are at $2.27, $2.30, and $2.33, while support lies at $2.19, followed by $2.16 and $2.13. Technical indicators show a slight bullish tilt, with the 50-day Exponential Moving Average (EMA) at $2.18, just above the 200-day EMA at $2.17. If prices hold above $2.22, upward momentum is likely, but a drop below could trigger a swift sell-off.

West Texas Intermediate (WTI) is trading at $66.07, down 0.25%, and hovering near its pivot level of $67.10. The price action remains subdued, struggling to break through higher resistance levels. Immediate support is seen at $65.20, and if prices fall below this level, further downward pressure is anticipated.

Technically, WTI shows a bearish bias, with the 50-day EMA at $69.86 and the 200-day EMA at $73.95, both well above the current price. This suggests continued downward momentum. A rise above $67.10 could open the door for recovery, with resistance at $69.03 and $70.73. However, until this occurs, bearish sentiment prevails.

Brent Oil Price Forecast

Brent crude (UKOIL) is currently priced at $69.49, down 0.14%, and remains below its pivot of $70.62. The market is confined within a descending channel, indicating continued bearish pressure. Immediate support is at $68.65, and a break below could lead to further declines, with the next key support level at $67.26.

On the upside, immediate resistance sits at $72.76, followed by $73.48 and $74.80. Technical indicators suggest further downside, as the 50-day EMA at $73.27 and the 200-day EMA at $77.44 are both positioned well above the current price. A rise above $70.62 could signal a shift in momentum, but for now, the outlook remains bearish.