Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

Trading positions 

• Crude Oil [CLZ21] Long around $76.03-77.23 support (yellow rectangle) – with stop below $74.67 and targets at $79.39 and $81.08 – See Chart section
• Natural Gas [NGZ21] Long around $5.268-5.361 support (yellow rectangle) – with stop below $5.070 and targets at $5.750 and 5.890 – See Chart section

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Trading Context

• The daily correlation between coal prices in China and the WTI is a bit suspicious, but seeing coal prices fall precipitously on Zhengzhou Commodity Exchange might deflate concerns of the Chinese energy crisis. What also undermined the market was the OPEC+ downward revision for 2021 demand.
  On the Middle Eastern geopolitical scene, Tehran's desire to resume nuclear negotiations makes it more likely that Iran barrels will return to the market in the medium term. Therefore, it looks like a lower pull-back could happen on the crude oil market.
• Natural gas futures are plunging despite an intensifying cold front on the horizon. Selling is accelerating in today’s session on some bearish drivers. If the pullback is going deeper – as I expect – then it might find some support onto the $5.268-5.361 area. Therefore, I anticipate a rebound around that band. As usual, the recommended stop loss depends on your risk profile, so I just suggest placing it below the previous swing low ($5.070) or using any Average True Range (ATR) multiple.

WTI Crude Oil (CLZ21) Futures (December contract, daily chart)
Henry Hub Natural Gas Futures (NGZ21) Futures (December contract, daily chart)

Have a good weekend!

As always, we’ll keep you, our subscribers, well-informed.

Thank you.

Sebastien Bischeri
Oil & Gas Trading Strategist