Oil, Natural Gas, US Dollar Technical Analysis Following OPEC’s Extended Output Delay

The recent decision by OPEC+ to delay a planned production increase has provided a notable boost to oil prices. By maintaining current cuts of 2.2 million barrels per day (bpd) through December, the alliance aims to prevent further price declines and stabilize the market. Despite the extension of production cuts, the oil market faces pressure from other significant forces. Record-high US production is one of the most notable factors contributing to this pressure.

Brent oil (BCO) and WTI crude oil (CL) experienced substantial losses last week, with sharp declines. However, escalating geopolitical tensions in the Middle East have supported prices. The threat of potential military action by Iran against Israel has increased volatility in the energy market. These geopolitical risks keep market participants on edge, as regional disruptions could seriously affect global oil supply.

Moreover, the U.S. presidential election has also impacted energy prices. The victory of either Donald Trump or Kamala Harris could lead to significant shifts in energy policies, affecting investor confidence. Additionally, the Federal Reserve’s expected 25 basis-point rate cut on Thursday introduces another layer of uncertainty. On the other hand, natural gas (NG) prices fluctuate within tight ranges and exhibit strong volatility. Global uncertainties in the energy sector drive this volatility.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Descending Broadening Wedge

The daily chart for WTI oil shows that the price trades within a descending broadening wedge pattern. The range of this broadening wedge extends from $62 to $80, indicating significant volatility. The price shows positive momentum on Monday, breaking above the 50 SMA. At the same time, the RSI is moving above the midline, suggesting a short-term buildup of positive momentum in oil prices. However, the overall trend remains uncertain, and prices will likely remain volatile.

Oil 4-Hour Chart – Price Fluctuation

The heavy volatility in the oil market is also evident on the 4-hour chart for WTI crude oil. It shows that prices are fluctuating within broader ranges. Support remains at $65.60, but the rebound on Monday appears positive. The inverted head and shoulder pattern presents the positive momentum on the 4-hour chart.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Triangle Pattern

Natural gas prices fluctuate in broader ranges before the US election decision. As the oil market rebounded due to tensions in the Middle East, natural gas prices also gained positive momentum on Monday. The price is approaching the apex of a triangle pattern, indicating further tightening within narrow ranges. The price has rebounded from the support level of $2.10 and is headed towards the triangle’s resistance.

Natural Gas 4-Hour Chart –Descending Channel

The 4-hour chart shows the formation of a descending channel, with Monday’s price rebound capped at the resistance of this channel. Prices are likely to remain in consolidation, and the outcome of the US election will further drive volatility in the energy market.

US Dollar Technical Analysis

US Dollar Daily – Trend Reversal

The US Dollar Index shows a trend reversal on the daily chart following Monday’s price drop. However, the sharp decline in the US dollar on Monday was driven by uncertainty surrounding the US election. The index is likely to experience further price volatility as the election unfolds. It is currently attempting to break below the 200 SMA at 103.90. A break below this level would confirm the trend reversal. However, the index is expected to show fluctuations due to ongoing uncertainty in the financial markets.

US Dollar 4-Hour Chart – Symmetrical Broadening Wedge

The 4-hour chart shows that the US dollar index found support at the symmetrical broadening wedge pattern and rebounded higher. The broadening wedge pattern indicates potential volatility stemming from the US election. The index remains within the range of 103.60 to 104.70.

Final Words

In conclusion, the oil and natural gas markets are experiencing significant volatility due to various factors. These include OPEC+ production decisions, geopolitical tensions, and the US presidential election. OPEC+’s decision to extend production cuts has temporarily boosted oil prices. However, record-high US production and Middle Eastern geopolitical risks keep the market on edge. Technical analysis highlights the descending broadening wedge for WTI oil and the triangle pattern for natural gas, which indicate potential price fluctuations. Similarly, the US Dollar Index shows volatility, driven by election-related uncertainties and attempts to break below critical support levels. Overall, energy markets will likely remain unpredictable as global events unfold, impacting investor sentiment and market stability.