Natural Gas And WTI Oil: Bullish Hammer Set To Create Breakout Move Soon?
2022.05.03 10:05
Soon after the outcome of the EU’s energy commission on Monday on issuing detailed guidelines on Russia’s ruble demand for gas and oil, a sharp reversal is on the way in natural gas and oil prices.
Undoubtedly, the EU is leaning towards banning Russian oil imports by the end of the year, according to two EU diplomats, after talks between the European Commission and EU member states over the weekend.
While Western countries have refrained from buying Russian oil due to sanctions on those exports, the impact on global supply looks somewhat cushioned as India has been picking up heavily-discounted Russian cargoes.
I find that the complete energy embargo is likely to take a full year while the countries line up alternative supply sources as Russia covers nearly 40% of European energy demand.
The United States is already the world’s largest producer of natural gas. Still, two mainstays of production – the Appalachian region and West Texas – are seeing growth slow, with companies blaming the lack of adequate pipeline infrastructure, despite prices near 14-year highs.
On the other hand, China released data on Saturday showing factory activity in the world’s second-largest economy contracted for a second straight month to its lowest level since February 2020 because of COVID lockdowns.
I find that the current geopolitical situation looks evident enough to keep the energy price on the higher side this year as the demand-supply equation has turned into storage phobia since Russia invaded Ukraine on Feb. 24.
Natural gas futures daily chart.
WTI Crude Oil Futures Daily Chart.
Technically speaking, both the Natural Gas and WTI Crude Oil Futures are trading in the positive territory today as the formation of the ‘Bullish Hammers’ in the daily charts of both components of the energy sector – nat gas and crude oil, confirming a breakout move soon in both.
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