🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Market analysis: Oil and Natural Gas update

Published 12/06/2024, 10:35
CL
-
NG
-
  • Oil charges higher despite a stronger dollar, faces resistance ahead

Oil prices have regained the bullish momentum once again. US crude (WTI) is up over 4% in the week after bouncing from the lows of 72.60. The reversal started on Wednesday last week gaining strength on Thursday before encountering resistance on Friday after the US jobs data sent the dollar soaring. But, as the downside pressure from the dollar continues, US crude has managed to regain the upper hand, with Monday seeing its best daily performance since November, up 3.7%.

Traders seem to have shaken off the negative feelings from OPEC’s announcement to start phasing out production cuts later in the year. The focus now seems to be on an improved demand outlook, reinforced by the bigger-than-expected drawdown in US crude inventories published on Tuesday. Moreover, the Energy Information Administration (EIA) raised its 2024 world oil demand growth forecast to 1.10 million barrels per day from a previous estimate of 900,000 bpd, while the Organization of the Petroleum Exporting Countries (OPEC) maintained its 2024 forecast for relatively strong growth in global oil demand, citing expectations for travel and tourism in the second half. Inventory data from the EIA will be published on Wednesday afternoon.

Traders will also be paying close attention to the US Consumer Price Index (CPI) published hours before the Federal Reserve meeting on Wednesday. A dovish outlook from the Fed could support the oil rally further, but with the stronger-than-expected wage data last week, we could see Jerome Powell continue to push back on the possibility of rate cuts, which could weigh on oil prices.

The first area of resistance for buyers will be the $79.30 horizontal line, to which both the 200-day SMA and 100-day SMA are converging. Beyond that, the 50-day SMA – currently at $80.00 - could offer some resistance before heading towards the key range of support/resistance between $80.65 and $82.54.

US Crude (WTI) daily chart

Past performance is not a reliable indicator of future results.
Natural Gas bullishness starts to fizzle out

Natural gas prices have broken above resistance at 3.1260 for the first time since November. The commodity has found continued support after bouncing off the 200-day SMA ($2.5280) on May 31. But the bullish appetite has started to fizzle out as the RSI has reached overbought levels. After Tuesday’s 5.7% gain, natural gas has started Wednesday’s session with a bearish bias.

There is plenty of resistance up ahead, which will make it tough for buyers to continue having the upper hand. There is likely to be some profit-taking after the recent appreciation, so this will be a good test of bullish appetite, and how further the upside can go.

Natural Gas daily chart

Past performance is not a reliable indicator of future results.





Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

The information provided is not to be considered investment advice or investment research. Capital.com will not be liable for any losses from the use of the information provided.'

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.