Crude Oil Price Forecast – August 6, 2024

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WTI Crude Oil Technical Analysis and Short-Term Forecast

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI crude oil tested and held major support and a bearish decision point for the coming months at $71.5 on Monday. This is an area where the move down could stall and a bullish reversal occurs. However, the move up from $71.67 has been shallow and choppy so far and looks like a simple correction.

Today’s candlestick reflects a bit of near-term uncertainty, but the outlook continues to lean bearish for WTI crude oil. Taking out the $72.5 smaller than (0.618) target of the wave down from $74.56 will call for another test and attempt to close below $71.5. Settling below $71.5 will open the way for tests of $70.7 and then another confluent and psychologically important target at $70.1 in the coming days.

Nevertheless, there is still a reasonable chance for a larger test of resistance first. Should WTI crude oil overcome the $74.0 smaller than target of the waves up from $71.67 and $72.2 look for a test of $74.7 and key near-term resistance at $75.2. Settling above $75.2 would call for an extended correction to challenge $76.1 and possibly higher.

Natural Gas Technical Analysis and Near-Term Outlook

Natural gas formed another hanging man pattern today. As discussed yesterday, this would normally dampen odds for a larger test of resistance. However, the intra-day wave formation up from $2.368 looks to be unfolding as a five-wave pattern, and the move up from $2.596 is likely Wave V, which targets $2.80. This is the XC (2.764) projection of Wave I, the smaller than (0.618) target of Wave III, and the larger than (1.618) target of Wave 1/V. The connection to $2.80 is made through $2.72 and then $2.76.

Natural Gas - $0.035 Kase Bar Chart
Natural Gas – $0.035 Kase Bar Chart

Once $2.80 is met, a significant three-wave test of support is anticipated. An eventual close above $2.80 would call for the move up to unfold as a larger five-wave pattern (or at least a nested three-wave pattern) that targets $2.93 and higher.

With that said, the hanging man patterns warn that the move up might be a simple three-wave correction of the decline from $3.507 that is stalling around $2.70. Should natural gas take out the $2.618 swing low look for a test of $2.58. This is the 38 percent retracement of the rise from $2.368 and is a level that must hold for the move up to continue to unfold as a five-wave pattern as expected. Settling below $2.58 would call for a test of key support at $2.50, a close below which would confirm the corrective move up is over and would shift odds back in favor of a continued decline.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.

August natural gas stalled at $2.998 late last week. So far, August has pulled back to $2.697. The $2.998 swing high was in line with the 1.618 projection of the wave $1.99 – 2.494 – 2.157. From a technical standpoint, the move up was due for a correction. Momentum was exhausted and the bearish KasePO divergence indicates the correction that began Tuesday should now challenge major support levels.

NGQ6 20160706

Longer-term, the outlook for natural gas is positive. The move up looks to be forming five-waves. Wave III of the five-wave pattern was completed at $2.998. The corrective Wave IV is now underway. A normal correction should hold $2.61, the 38 percent retracement from $1.99 to $2.998. The $2.61 level was also strong support between June 10 and 17.

A close below $2.61 would open the way for a more significant correction. However, the longer-term bullish outlook would not be called into question unless there is a sustained close below $2.38. This is the 62 percent retracement of the move up from $1.99. Such a move is highly doubtful without a significant bearish shift in underlying fundamentals.

Wednesday’s hammer formation indicates the move down may halt to a grind lower. A test of Tuesday’s $2.84 midpoint will likely take place on Thursday. Key resistance is $2.88. This is the 62 percent retracement from $2.998 to $2.697. While $2.88 holds, odds will continue to favor a deeper correction.

This is a brief natural gas forecast for the next day or so. Our weekly Natural Gas Commentary and intraweek updates provide a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four-week trial.