Energy and Dollar Charts Point to Deepening Risk-Off Sentiment

Key Moments

Macro Backdrop: Oversupply and Risk Reset Pressure Oil

Oil prices retreated to their weakest levels since early 2021 as worries over excess supply, fragile demand conditions, and negative technical structures across crude, natural gas, and the U.S. Dollar Index underscored a broader reset in global risk appetite.

Brent crude oil (BCO) slipped below $60 per barrel, while WTI crude oil (CL) slid toward the mid-$50s. Market participants focused on the possibility that more Russian barrels could re-enter the market if a Russia–Ukraine peace agreement progresses. Diminished expectations for sanctions provided additional downward pressure, reinforcing a bearish tone for crude.

Market structure also confirmed the weakness. The six-month Brent spread moved into contango for the first time since October, signaling plentiful supply and soft near-term demand. A substantial surplus has already been discounted, which limits the scope for near-term price gains. Under current conditions, average prices are seen recovering only modestly next year unless a significant geopolitical or policy shift reshapes supply fundamentals.

Demand-side worries added to the selloff. Subdued Chinese economic data raised fresh questions about global consumption just as supply continues to build. While U.S. action against a Venezuelan oil tanker provided a brief lift, ample floating storage and proactive Chinese purchases tempered that support. Overall, the balance of risks for oil prices remains skewed to the downside in the near term.

WTI Crude Oil: Key Technical Levels

The daily chart for WTI crude shows prices oscillating within a long-term support band between $55 and $60. A clear break beneath $55 would likely trigger a pronounced leg lower. Despite short-lived bounces, the dominant trend is still to the downside, with prices trading under persistent selling pressure. A decisive move above $65 would be required to indicate a potential shift away from the current bearish phase.

On the 4-hour chart, WTI continues to trade within a well-defined downward channel, reinforcing the prospect of additional weakness.

A push above $62 would point to a short-term rebound, opening room for a move toward $65.50. However, a sustained break above $70 would be needed to negate the existing bearish structure and point to a more durable trend reversal.

Natural Gas: Bullish Structure Holding Above Key Supports

The daily chart for natural gas (NG) shows a sharp correction down to the important support at $3.82, followed by a rebound. Despite this pullback, prices remain above the 200-day simple moving average, signaling that broader momentum is still positive.

A recovery through $4.70 would indicate that the correction has likely run its course and that the prior uptrend may be resuming. The formation of an Adam and Eve bottom pattern above $2.60 also points to the possibility of a long-term base.

A clean break below $2.60, however, would negate this bullish configuration and point to scope for a deeper decline in natural gas prices.

On the 4-hour chart, natural gas has retreated from long-term resistance near $4.70 and found firm buying interest around $3.82. The structural backdrop remains constructively bullish as long as price action stays above the key support area near $2.60.

A breakout beyond $5.50 would likely unleash a strong rally, with the potential to drive natural gas materially higher from current levels.

U.S. Dollar Index: Testing Critical Support Zone

The daily chart for the U.S. Dollar Index shows that the index remains in a bearish phase but continues to hold above the key 98 support area.

From this support, the index is attempting to rebound, with initial resistance identified near 99.20. A confirmed breakdown through 98 would open the way for a move toward 96.50.

Conversely, a breakout above 100.50 would establish a bottoming signal and could set the stage for a rally toward the 102 region.

The 4-hour chart reflects sustained downside momentum following the formation of a double top and a break below 99. The index has tested the 98 level, bounced modestly, and is now consolidating close to that zone.

A decisive move under 98 would likely trigger another sharp leg lower. In contrast, a clear move above 100.50 would overturn the current bearish structure and indicate the beginning of a robust upside phase.