Key Takeaways:
WTI crude fell to $74.02 a barrel on Thursday, extending its decline after breaking below a large symmetrical triangle pattern, while Brent crude tested support at $77.74 and natural gas held its ascending channel floor at $3.152.
"One month into the truce, the physical market is still absorbing the loss of roughly 10 million barrels a day of Middle East output, and even positive cease-fire news has not alleviated supply concerns," said Arslan, a finance MBA and MPhil in behavioral finance who specializes in market sentiment analysis. "Demand destruction from higher energy prices and economic weakness will provide some counterbalance, but fundamentals remain tight well into the third quarter."
WTI crude has now broken below three key support levels — $86.05, $79.54 and the psychological $75 mark — after the triangle violation accelerated selling pressure. The 4-hour chart shows a series of lower highs and lower lows, with the 50-period moving average acting as resistance. The relative strength index is approaching oversold territory, indicating persistent bearish momentum. The volume profile shows the $79 to $86 zone has flipped from support to major supply. Brent crude is following a similar pattern, trading inside a descending channel whose lower boundary was breached, pushing prices below the $83.17 support level. The RSI on the 4-hour chart is also near oversold, and the 50MA continues to cap any upside attempts.
Natural gas presents a contrasting picture. The NYMEX Henry Hub contract traded at $3.152, holding above the lower boundary of an ascending channel after consolidating around the 50-period moving average. Mixed candle patterns suggest buyers are defending the $3.12 to $3.15 support zone following a pullback from the $3.26 high. The RSI has cooled back to neutral at 50 after being overbought in the morning session, giving the structure room to extend higher as long as prices stay above the channel floor.
Supply and Demand Dynamics
US natural gas production stays strong because of associated gas from oil drilling, keeping Henry Hub better supported than its global peers. Storage inventories are well stocked, and liquefied natural gas exports provide an additional outlet for supply. In Europe and Asia, the benchmarks face greater challenges from logistical difficulties in transporting alternative supplies, while the energy shock has increased weather sensitivity in power demand.
For crude, refinery runs are holding up reasonably in the United States and Asia, indicating that demand from the two largest consuming regions will remain resilient. The Bank of England's decision on Wednesday and potential Federal Reserve guidance due Friday will influence demand expectations across the global economy, with markets focused on the inflation outlook.
What Happens Next
The next few weeks will determine whether geopolitical solutions can restore flows faster than inventory drawdowns offset them, or if tight supply keeps prices supported through the third quarter. OPEC+ discipline and weak non-OPEC supply growth point to a continued tight balance. For WTI, the next major support sits at $69.50, while resistance is at $76.00. Brent faces resistance at $80.00 and then $83.17. Natural gas resistance levels are at $3.203, $3.268 and $3.324, with support at $3.121 and $3.073.
This article is for informational purposes only and does not constitute investment advice.
