Natural Gas and Oil Forecast: Descending Channels Signal Weak Momentum
News Summary
Oil prices have slid for a second consecutive week, with Brent crude dropping 2.3% and WTI falling 2.5%, as geopolitical risk premiums fade. Natural gas futures are trading near $3.88 after a sharp pullback from $5.10, maintaining a bearish stance below the $4.20 resistance zone. Analysts note that optimism for resolving major global conflicts has outweighed fears of supply disruptions from sanctions and shipping restrictions. Bank of America suggests that lower prices might curb supply growth, stabilizing the market rather than triggering a sharp selloff. Technical analysis indicates that descending channels continue to dominate WTI and Brent charts, capping rallies and sustaining downward trend pressure. Natural gas is attempting to base above $3.84, while WTI and Brent find key short-term support near $55.15 and $58.70 respectively.
Background
The global oil and natural gas markets are currently experiencing a significant reduction in geopolitical risk premiums, largely driven by improved prospects for resolving major global conflicts. In 2025, following President Trump's re-election, his administration's pragmatic foreign policy approach may be perceived by the market as conducive to de-escalating international tensions, thereby alleviating concerns over energy supply disruptions. Historically, geopolitical uncertainties, such as tensions in the Middle East or threats of sanctions against major oil producers, have often driven oil prices higher. However, with the abatement of these risks, market focus is shifting towards fundamental supply and demand dynamics, coupled with the descending trends evident in technical charts, reflecting a broader shift in market sentiment.
In-Depth AI Insights
Is the current abatement of geopolitical risk premiums a long-term trend or a temporary reprieve? - While market optimism about resolving global conflicts is noted, the nature of geopolitical risk is inherently complex and dynamic. The Trump administration's