NEW YORK (TheStreet) -- Crude prices are expected to decline this week on bearish technical indicators, rising inventories and improving refinery utilization rates. Meanwhile, natural gas is likely to trade higher on bullish technical trends and higher demand.

Oil prices may trade lower this week on rising inventories. Last week, U.S. Energy Information Administration reported that crude oil stockpiles rose. Meanwhile, Baker Hughes(BHI) rig count stands at 977, up 4 from the penultimate week. Rising rig counts and higher refinery utilization shows an increase in production, leading to a decline in oil prices.

However, major economic releases are expected to be positive for the economy, which may improve oil prices to some extent later. Overall, oil prices are expected to end the week on a negative note.

Crude futures for October delivery declined 0.75% after hitting a low of $71.53 per barrel, and ended the week on a bearish note at $74.60. Crude is trading below the major trend line resistance and has a potential to fall further. Momentum indicator weekly RSI (14) is treading at 0.43 levels. As per Fibonacci principle, crude may test the resistance levels of $75.50 to $77.10. If price sustains below $75.50 levels, crude could remain bearish. In addition, falling prices and rising volume of crude oil futures in the last month indicate a bearish outlook.

Gas is expected to trade in the green as the demand for gas from power plants is expected to surpass that for coal. However, an increase of 54 Billion cubic feet (Bcf) in inventories last week and increase in rig counts may limit the uptrend.

Natural gas futures for October delivery gained 0.63% last week, recovering from 11-month lows. Futures gained from a weekly low of $3.693 and settled at $3.939 Friday. The momentum indicator RSI is at 0.37, suggesting the oversold trend could end soon. However, the moving average principles are not supportive, as the prices are trading below the long-term and short-term EMA (9, 18 and 45 days). Since natural gas gained last week along with a rise in volume, a bullish trend could continue this week. Support is seen at the 3.859 and 3.693 levels, while resistance is seen at $4.09 then $4.28.

Recap of Last Week

NYMEX West Texas Intermediate Crude fell around 0.8% last week owing to an appreciating dollar index and rising inventories. Overall, during August, crude prices fell more than 9%. Gas showed a bullish trend last week, since a continuous fall in gas prices guided power plants to switch from coal to gas.

In the past week, oil and gas companies ended in the green. Among integrated oil and gas majors, Exxon Mobil(XOM), Chevron(CVX), ConocoPhillips(COP), BP(BP) and Total(TOT) were up 2.5%, 4.1%, 3.1%, 5.3% and 5.6%, respectively.

Other oil and gas producers Marathon Oil(MRO), Apache(APA), Devon Energy(DVN), EOG Resources(EOG) and Occidental Petroleum(OXY) gained around 3.9%, 2.9%, 3.8%, 1.0% and 3.8%, respectively.

 

Buck