NEW YORK (TheStreet) -- Crude oil and natural gas will likely trade higher this week on China's decision to end the Yuan's two-year peg against the dollar, boosting investor confidence in the global economic recovery and demand growth for crude oil and natural gas.

The Department of Energy report last week was negative for crude oil prices; however, prices registered a weekly gain on economic recovery. Early this week, crude oil is set to rally on the China story. In addition, the eurozone crisis may have abated for now, in the absence of announcements of fragile economic conditions in other countries, apart from Greece.

The forecast of continuing hot weather should firm natural gas prices during the week. The rise in personal consumption and spending data in the U.S. is a positive signal for natural gas prices. In addition, the current year is expected to be one of the most active hurricane seasons this decade, which could support higher natural gas prices. However, natural gas inventories at 14% above the five-year average should keep the price spikes to a minimum.

Technical analysis implies crude oil and natural gas to trade sideways to higher this week. This past week, crude gained 3.87%, reaching a high of $79.17 per barrel to close at $78.26 per barrel. As per Fibonacci principles, crude oil is witnessing resistance at the $79.93 level. The leading indicator, stochastic (5, 3) is close to the overbought level, indicating that the past week's bullish momentum may halt, at least in the interim, which may not be the case following China's unshackle of the Yuan peg. Overall, crude oil prices are anticipated to move higher.

Natural gas prices traded sideways to higher the past week, gaining as much as 4.5%. Current prices are above 13, 22 and 45 EMA, signaling a rebound. As per Fibonacci principles, natural gas is witnessing range-bound movement between 50% retracement at $5.011 per MMBtu and 61.8% retracement at $5.262 levels per MMBtu, suggesting that a break on either side may start a fresh momentum. A leading indicator, stochastic (5, 3), is treading the overbought zone. The RSI (14) daily has ascended from 0.42 to 0.60, pointing toward a northward momentum. Overall, the indicators are mixed and natural gas may move higher this week.

Recap of Last Week

Crude Oil: Early last week, crude oil prices traded higher on the weakening dollar and speculation that the second half of the year will post improved economic growth and boost oil demand. Prices continued moving up, bolstered by gains in the U.S. equity markets.

A Department of Energy report released during the week showed oil and distillate inventories rising by 1.69 million barrels and 1.798 million barrels, respectively, while gasoline inventories declined by 636,000 barrels.

The report was negative for crude oil prices; however, the rally in equity markets on the prospect of a rebound in economic growth during the second half of 2010 supported crude prices.

Crude oil prices fell during in the second half of the week following a rise in unemployment insurance claims and a fall in manufacturing index.

Last week, oil majors Exxon Mobil ( XOM), Chevron ( CVX), ConocoPhillips ( COP) and Total ( TOT) gained 2.01%, 1.97%, 4.69% and 5.75%, respectively. In contrast, British Petroleum ( BP) declined 6.51% on concerns related to the oil spill.

Natural Gas: Natural gas prices rallied last week on forecasts of hot weather, which increases the demand for electricity for space-cooling purposes. Moreover, low pressure in the Atlantic Ocean, which has the potential to develop into a hurricane, also pushed prices higher.

EIA report during the week showed the upsurge in inventories by 87 billion cubic feet (Bcf), while market expectations stood at 90 Bcf, and the five-year average was 84 Bcf. Natural gas traded higher on the lower-than-expected buildup in inventories. U.S. natural gas inventories currently stand at 2.543 trillion cubic feet (Tcf), 14% above the five-year average.

Prices attained a high and low of $5.196 and $4.861, respectively, before closing the week at $4.997, with a weekly gain of 4.52%.

More from Stocks

Stocks Tumble as Trump Comments Lead to Worries Over China Trade Talks

Stocks Tumble as Trump Comments Lead to Worries Over China Trade Talks

Bank Stocks Slump After Congress Greenlights Dodd-Frank Rollback

Bank Stocks Slump After Congress Greenlights Dodd-Frank Rollback

10 Questions for PayPal Ahead of Its Big Investor Day

10 Questions for PayPal Ahead of Its Big Investor Day

Tesla's Model 3 Is Far From Being for the Masses -- at Least For Now

Tesla's Model 3 Is Far From Being for the Masses -- at Least For Now

China Makes Good on Car Tariff Pledge, Tesla Wins Big

China Makes Good on Car Tariff Pledge, Tesla Wins Big