WTI Crude Oil and Natural Gas Forecast - 31 August 2016

WTI Crude Oil

The WTI Crude Oil market initially tried to rally during the day on Tuesday but turned right back around to fall towards the $46 level. With the Crude Oil Inventories number coming out today, it’s likely that we will get quite a bit of volatility. Break down below that level tells me that the market is probably going to start reaching towards the $45 handle. On the other hand, if we can break above the top of the range for the day on Tuesday, I feel that the market will then approach $50. This is one of those times when the market seems to be ready to make a decision, so whatever happens next, I’ll be following.

Crude oil

Natural Gas

During the day on Tuesday, the natural gas initially tried to go higher as we have seen quite a bit of bullish pressure to go higher in this market. Ultimately, the $2.90 level offered quite a bit of resistance, which makes sense as I can see quite a bit of resistance all the way to the $3 level at this point. However, one of the biggest reasons that this market has gone higher is the fact that the storm season in the Gulf of Mexico looks highly volatile. However, the market looks very likely to be disappointed in higher prices due to the fact that the area could be dealing with massive tropical storms or even hurricanes. However, it now looks as if the major damage could be avoided, which of course disrupts quite a bit of production.

With that being the case, we fell rather drastically and I now feel that the market will reach towards the $2.75 level below, and then eventually the $2.50 level below. Given enough time, this market should continue to find sellers because quite frankly it’s been well overdone at this point in time, and a pullback is absolutely necessary at this point in time.

Given enough time, I think that volatility will continue time and time again, so with that being the case it’s very likely that the buyers and sellers both would of course have quite a bit in the way of trading opportunities going forward and I think that the $3 level above will be the most important level, because if we break above there then we should have a longer-term uptrend that will continue to grind its way to much higher levels. Ultimately though, I think that it’s very unlikely that we break above there with any significance. Because of that, I believe that as we are so high at the moment, it makes sense we pullback anyway. I am bearish, but I’m also well aware the fact that a meltdown isn’t necessarily going to happen.

Natural gas

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.