Key Points:
Crude oil prices dropped as rising OPEC+ production and weak global demand created a bearish outlook for the market.
Natural gas rose above $4.00 with strong momentum, targeting $4.228 and $4.416 as volume increases.
Chinese crude imports fell by 1.9% year-over-year, raising concerns about global demand and pressuring oil markets.
Market Overview: Energy markets faced pressure early on Monday as geopolitical tensions and weaker global demand continued to influence sentiment. Crude oil prices dropped on Friday, reflecting concerns that economic challenges and reduced consumer activity might limit fuel consumption. U.S. personal spending in February increased by just 0.4%, and consumer sentiment hit a two-and-a-half-year low at 57.0, further dampening demand expectations. Additionally, Chinese crude imports fell 1.9% year-over-year, adding to the bearish sentiment.
On the supply side, rising OPEC+ output—up by 320,000 barrels per day (bpd) in February to a 14-month high—along with a surge in Russian oil exports, which reached a 12-month peak of 2.5 million bpd, have pressured prices downward. However, renewed sanctions on Russia’s oil exports and heightened risks of supply disruptions from the Middle East are providing some support. Notably, stationary tanker storage increased by 7.6% week-on-week to 67.43 million barrels, signaling weak near-term demand.
Meanwhile, the U.S. rig count fell by two to 484, just above its three-year low, signaling continued production restraint. Despite the volatility, U.S. output remains near record highs at 13.574 million bpd. The market is in a delicate balance between bearish economic signals and bullish geopolitical risks.
Natural Gas Outlook: Natural gas prices have broken above a months-long downward trendline, surpassing both the 50-day EMA ($3.974) and 200-day EMA ($3.937). This breakout is supported by a bullish pattern, with prices now trading above $4.00. The next resistance levels to watch are $4.228 and $4.416.
A sustained hold above $4.00 strengthens the bullish outlook, especially with both EMAs trending upward. Should prices dip, support is at $3.938, followed by $3.755, the breakout level. With increasing volume and a clear structure, bullish sentiment appears to be regaining control.
Crude Oil Price Movements: WTI crude has slipped below its upward trend, breaking the $69.19 level, signaling short-term weakness. After a steady rise from mid-March, prices failed to hold above the 200-day EMA ($69.14) and are now below both the 50-day EMA ($68.81) and the 200-day EMA.
The drop puts pressure on the $68.49 support level, and a break below this could lead to a further decline to $67.61. On the upside, resistance is at $70.19 and $71.14. The Relative Strength Index (RSI) shows signs of cooling momentum but hasn’t yet reached oversold conditions.
In summary, the breakout from the recent channel and failure to hold the pivot level suggest a bearish bias. Below $69.19, this could be a sell-the-rip situation rather than a buying opportunity.
Brent Crude Price Outlook: Brent crude is trading at $72.40, slipping below its key pivot level of $72.96. Traders are watching for a bearish signal from the engulfing candle pattern at this level, which suggests a shift in momentum.
The price has broken the lower boundary of its rising channel and is now approaching a potential bearish crossover between the 50-day and 200-day EMAs. The 50-day EMA is at $72.47, while the 200-day EMA is at $72.70. If the crossover occurs below $72.96, it could signal further downside pressure.
Immediate support is at $71.53, followed by $70.56. On the upside, bulls will need to reclaim $72.96 to regain control. Until then, the bias remains bearish, with the bearish engulfing candle and EMA setup favoring a continuation of the downward trend.
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