Crude Oil & Natural Gas Forecast for next Week; Fundamental & Technical Analysis

SUMMARY

Oil dropped 4% in five days on record US crude output ahead of US elections and Fed verdict. Geopolitical calm pushed natural gas prices lower as traders focused on mild forecasts and ample storage levels.

What's weighing on crude oil prices?

-According to US government reports, Iran was on track to export around 1.5 million bpd in 2024, up from an estimated 1.4 million bpd in 2023. Iran backs several groups that are currently fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.

-Oil prices were also supported by expectations that OPEC could delay December's planned increase in oil production by a month or more due to concern over soft oil demand and rising supply. A decision could be made as early as next week. OPEC includes OPEC and its allies like Russia and Kazakhstan.

-As OPEC holds back on production, US oil major Exxon Mobil said its global output hit an all-time high, while Chevron said its US production hit a record high. The EIA noted that drillers pulled a record 13.5 million bpd of oil from the ground. EIA said that August's output hit a record 13.4 million bpd and that annual output was on track to hit 13.2 million bpd in 2024 and 13.5 million bpd in 2025.

-US job growth almost stalled in October as labour strikes in the aerospace industry depressed manufacturing employment. Hurricanes also impacted the response rate for the payrolls survey, making it hard to get a clear picture of the labour market ahead of next week's presidential election.

-Economists expect the US Federal Reserve to cut interest rates by 25 basis points next Thursday. After aggressively hiking rates in 2022 and 2023 to tame a surge in inflation, the Fed started lowering rates in September. Lower rates decrease borrowing costs, boosting economic growth and oil demand.

Upcoming U.S. Events:

Source: tradingeconomics.com

Crude Oil Technical View:

R: Resistance, S: Support & T: Target

Crude Oil still looks in the consolidation range (6,500-5,500) as no strong trigger exists. All eyes on the upcoming week when the US FOMC event is aligned; before this, crude will be volatile also. Till now, there needs to be NEUTRAL bias and to do level-based trading (daily Chart SetUp shared on our Twitter and Telegram handles).

Immediate Resistance at 61,00-6000 and Support at 5,890-5800.

Major Resistance zone at 6,490-6,400 and Support at 5,579-5,500.

*Expected Monday Opening: Flat to Gap-Up

Crude Oil Option Data View:

Source: MCX

If we talk about the CALL side, 6000CE and 6100CE hold heavy OI, which clearly shows a high selling pressure, which will act as an immediate hurdle for the Monday session. Whereas on the PUT side 5700PE, 5800PE, and 5900PE hold heavy OI which shows multiple support levels on the lower side.

Crude oil trying to create a base near 5700 level (which was the average low of this week), and just needs to break 6,100-6,000 zone to move upside toward 6,200-6,300 and then 6,500 levels.

Natural Gas View:

Key Fundamental Points:

• Geopolitical calm pushes natural gas prices lower as traders focus on mild forecasts and ample storage levels.

• Natural gas futures face a bearish outlook with EIA reporting storage at 3,863 Bcf, 178 Bcf above the five-year average.

• Analysts see further downside potential as warm U.S. weather weakens heating demand into mid-November.

• High daily production at 102.8 Bcf keeps the market in oversupply, intensifying downward pressure on prices.

• Mild temperatures expected to persist across the U.S. reduce need for heating, driving bearish market sentiment.

Technical View:

Source: 8bit Market Research & Analytics

Due to low demand, natural gas prices showing some pressure and now trading near their Crucial/Immediate support 10 & 20 DEMA at the 224-220 level zone, if it takes support and holds above 228-230 zone (immediate resistance), will expect a short covering toward 24o-243 which is a major weekly hurdle and October series high. Any bullish reversal and aggressive long possible above the 243-240 zone.

If Natural gas fails to hold the immediate support zone (224-220), then we can expect 210 (50DEMA) and a major support zone (203-200) as a downside target.

*Sentiment still looks weak

*Expected Monday Opening: Flat to Gap-down

Natural Gas Option Data View:

Source: MCX

On the CALL side 230CE, 240CE, and 250CE hold heavy OI showing heaving selling pressure, where 230 will act as immediate resistance/sell level on Monday and 240-250 will act as a major hurdle for the upcoming week.

On the PUT side 220PE and then 200PE hold good OI, which shows 220 will be immediate support on Monday whereas, 200 will be the major support level.

Data still looks weak and bearish as CALL writers have higher conviction than PUT writers, if natural gas fails to hold 224-220, then sellers will drag NG to 200 levels also.

Traders should keep an eye on EIA storage reports and weather model updates for any potential changes. However, unless there’s a marked shift in demand drivers, prices are likely to test support near Rs. 220-217 as the market heads deeper into the season under the weight of oversupply.

***Crude Oil & Natural Gas Forecast for next Week***