Key Points:
- WTI crude is little changed around $69 after a 3 pct fall, helped by ease in Middle East supply concerns
- Geopolitical risks and especially the situation with Russia and Ukraine ensure the primary fundamentals for energy prices.
- Natural gas is trading just above the $3.41 ‘floor’; stronger supports reside at $3.27 and $3.17 which could lead to more depth selloffs.
Table of Contents
Market Overview
WTI crude oil and gas were trading at around $69 per barrel on Tuesday after a hefty 3% tumble as geopolitical risks in the Middle East which were earlier fuelling supply-side worries eased. But risk aversion driven by the emerging virulence of conflict in Eastern Europe and uncertainties over relative stability in the broader oil-bearing regions has continued to contribute subdued support to energy prices by dint of the Russia-Ukraine stand-off.
Oil was also pressured by a stronger dollar resulting from renewed trade policy concerns that effected demand.
Investors are paying attention to the OPEC meeting scheduled for December 1 to look for clues on production changes. Geopolitical factors and exchange rate movements continue to be the focal factors underlying near-term trends for natural gas and oil prices.
Natural Gas Price Forecast
Natural Gas (NG) is currently at $3.41, -0.47% for the day and the price seems to be weak around an important support/resistance level. This level seems to be holding some sort of support that is keeping the sellers in check. The 50-day EMA is currently at $3.27 and the $3.41 IC can reinstate this area of the chart as a pivot point.
Next higher levels of supply are located at $3.57, $3.68, and $3.79 while downside pressure defines an obvious downtrend line on the chart.
Nevertheless, a failure to do so and a break below $3.41 could prompt more selling at $3.27, $3.17, and possibly $3.07.
WTI Oil Price Forecast
Crude oil from the United States (USOIL) is at $69.07 gaining 0.08% though it is hanging precariously in a key pivot level at $68.57. This has served as a firm base, with a forming triple-bottom pattern indicating a possible bullish reversal.
First support is found at $69.65, and further support levels are given if the price increase continues at $70.37 and $71.48.
The reverse is the case, with support levels placed at $67.82, $67.20, and $66.58, while a breakdown of $68.57 is a bearish signal. It is well worth noting here that both the 50-day EMA ($69.70) and the 200-day EMA ($69.58) are currently above us, which can act as a ceiling to higher moves.
Brent Oil Price Forecast
UKOIL (Brent) is at $72.56, only 0.01% higher from the day’s high, and has remained volatile around the pivot of $72.10. The price seems well on its way to giving back a 23.6% Fibonacci retracement at around $72.88 which corresponds to initial resistance. Getting out of this range can open up a new wave of growth, although the next levels are $73.36 and $73.73.
To its weakness, there are foll masses at $71.58 with other support following it at $71.16 and $70.68. Importantly, there exist further resistance indicators – the 50-day EMA at $73.56 and the 200-day EMA at $73.43.
Brent’s picture remains bullish but a breakdown of $72.10 may trigger a steeper selloff.
FAQs
1. How do Russia-Ukraine tensions affect oil and gas prices?
The conflict disrupts supply chains, particularly in Europe, where Russia is a major energy supplier. Sanctions, uncertainty, and supply risks lead to elevated prices.
2. Which countries are most impacted by rising prices?
European nations are heavily affected by the reliance on Russian gas. Developing countries importing energy also face economic challenges due to higher costs.
3. Are alternative energy sources reducing the impact?
Efforts to transition to renewables and increase LNG imports have mitigated some effects, but scaling these solutions takes time, leaving markets vulnerable.