Energy Markets Retreat as Rising Inventories Pressure Oil and Gas Prices

Key Moments

Macro Backdrop: Volatility Rises as Inventories Build

During Thursday’s Asian session, escalating geopolitical risks injected fresh volatility into oil and natural gas markets. After an initial rise, major crude benchmarks reversed course, sliding more than 2% in early Asian trading.

Market sentiment softened as earlier worries about potential supply interruptions eased. At the same time, a stronger-than-anticipated build in U.S. crude inventories – up by 3.4 million barrels to 422.4 million – added to the downside pressure on prices. Additional headwinds came from Venezuela, where higher production and the resumption of exports contributed to the bearish tone.

There were also supportive elements in the backdrop. Chinese crude imports were described as solid, with volumes up 17% year-on-year in December. In addition, projections from major producers pointing to balanced supply-demand conditions in 2026 offered some longer-term stability. In the nearer term, WTI was seen potentially holding within a $55–$65 range as risks remain elevated.

Natural Gas Technical Outlook

Natural gas is trading close to $3.17 after failing to sustain a move above the $3.38 resistance area, which has now turned into a supply zone. On the 4-hour chart, the price continues to respect a descending trendline that has repeatedly halted upside attempts, keeping the market confined within a wider bearish channel. Recent candle formations with long upper shadows highlight persistent selling into rallies.

On the downside, the first notable support level is identified at $3.05, followed by $2.83, where previous demand intersects with a horizontal base. Both the 50-period and 200-period EMAs are trending lower, underscoring the prevailing bearish bias. The RSI is situated near 40, indicating subdued momentum without yet entering oversold territory.

From a tactical standpoint, the outlined trade approach is to initiate short positions below $3.15, aiming for $2.90, with a protective stop placed above $3.40.

WTI Crude Oil Price Analysis

WTI crude oil is quoted around $59.80 after a sharp reversal from $62.60, where a pronounced bearish engulfing candle formed on the 4-hour timeframe. The price turned lower from an upper resistance band located within a broader descending channel, which aligns with a falling trendline drawn from the November highs.

The recent upside breakout lost traction near the 61.8% Fibonacci retracement level, encouraging some profit-taking. Immediate support is seen at $58.70, followed by $56.70, an area that coincides with a rising lower trendline. The RSI, described as a leading indicator, has rolled over from levels near 70, signaling waning momentum rather than a clear trend reversal.

The specified trading plan calls for selling below $59.70, targeting $58.00, with a stop-loss set above $61.00.

Brent Crude (UKOIL) Technical Picture

Brent crude is trading near $64.30 after a swift rejection from $66.70, where the price encountered a long-term descending trendline and upper resistance zone. Recent candles have displayed long upper wicks, indicating selling pressure at the upper boundary of the range.

The UKOIL price remains contained within a downward channel. The recent rebound stalled around the 50%–61.8% Fibonacci retracement band, limiting further gains. Immediate support is expected around $63.90, followed by $61.20, which aligns with a rising lower trendline.

The RSI has retreated from overbought territory, suggesting moderating momentum rather than growing strength. The trade concept presented is to sell below $64.00, with a target at $62.00 and a stop order placed above $66.80.