Oil Holds Above $100 While Natural Gas Eyes Breakdown Below $3

What to Know

• WTI crude oil continues to trade above the key psychological $100 level.
• Middle East tensions and supply concerns are helping support oil prices.
• A move toward $110 remains possible if bullish momentum continues.
• Natural gas remains under pressure as seasonal demand declines.
• A break below $3 could trigger a decline toward $2.60.
• Rising global interest rates and supply chain disruptions remain key macro drivers.

Currently, the backdrop for energy is one that we’ve been talking about for a while with the war in the Middle East and the now stalemate and ever-changing attitude of the Americans and the Iranians as to what to do next. The games being played through the media and online have more or less locked these markets up.

The one thing that I would say, though, is the supply chain is going to continue to suffer and, of course, interest rates are going to continue to climb as long as the supply chain does suffer, and therefore, we have a knock-on effect around the world. 

Crude Oil

Looking at the light sweet crude oil market, it appears that we did gap a little bit lower on Tuesday to start the session, but then bounced enough to just kind of hang out.

I think the $100 level is an area that a lot of people will be watching, as it is a large, round, psychologically significant figure, and an area, of course, that people will be watching overall. I do think that traders will continue to look at this as a buy-on-the-dip situation. The $110 level above is a bit of a target, I think, but I’m not looking for much here. I just think that when it sells off, you’re looking for a little bit of a bounce you can get involved in.

Natural Gas Market Outlook

Natural gas this time of year is a market that I never buy. I’m looking to sell it as soon as we show signs of exhaustion. We got a little bit of that on Monday, but we’ll just have to wait and see.

The natural gas markets, of course, have to deal with a very severe lack of demand from the United States, with the exception of this week, we’re going to have some hot weather. But I think we also have to look at this as a market that I think, given enough time, probably has to come to terms with the fact that supply far outweighs demand, at least this time of year.

I prefer shorts. I think probably could go back down to the $2.60 level, given enough time. I’m just waiting to see a bit of a dip below the $3 level.

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