WTI Crude Oil and Natural Gas Forecast - 13 February 2017

WTI Crude Oil

The WTI Crude Oil market rallied on Friday, as we continue to bang around in the recent consolidation. When I look at this chart, I recognize that the $54 level offers a significant amount of resistance all the way to the $55 level. Because of this, I am a bit leery of buying at this high level. In fact, my base case scenario is that we will find selling pressure nearby to start shorting again. I think the market will be stuck in consolidation until we can figure out exactly who is going to win, the OPEC production cut traders, or the traders that are paying attention to the oversupply. I recognize that the momentum indicators are all slowing down, so I must admit that even though the market has been consolidating, I am a bit cautious and believe that it is only a matter of time before the sellers get involved. If we break above the $55 level, that of course would change everything.

Crude oil

Natural Gas

This is a market that simply can’t get out of its own way. I cannot make a significant argument for buying natural gas any time and quite frankly at any price. As someone who lives in the middle of where a huge part of natural gas fracking occurs in the United States, I can assure you that there is no shortage and natural gas, and there won’t be for at least my lifetime, if not several others. Natural gas is very much like the gold markets in the 1980s, you just simply sold every time it rallied. You can see that even though in November there was a “rip your face off” type of rally, we have since given back almost all of it, and started this out with a massive gap lower.

What most foreigners don’t understand the natural gas is that in the United States, Canada, and Mexico, most oil rigs offshore produce a large flame at the top of the tower. What’s in that flame? You guessed it-natural gas being burn off because it quite frankly isn’t worth collecting. A breakdown below $3 sends this market looking for the $2.60 level.

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.