NEW YORK ( TheStreet) -- The overall outlook for crude oil shows downsides in the near term while some low-level buying could limit the risk during the upcoming week.

Major U.S. economic indicators may continue to indicate a weak recovery. Inventory reports released in recent weeks by the Department of Energy failed to show any demand resurgence for petroleum. In addition, technical indicators suggest a weak outlook for crude oil.

The forecast of hot weather in the U.S. during the week may increase natural gas demand. However, a rising rig count may limit price gains. The surplus in natural gas inventories has been declining which is expected to tighten the supply side of the market. Overall, the market may trade slightly higher on the forecast of hot weather.

Technical analysis implies crude oil to trade lower this week. Last week, crude oil declined 8.57% to close at $72.17 a barrel. Currently, crude is trading below past week's lows, with negative indicators implying a further decline in prices later this week. Crude has breached the strong support level of $74.55 and is trading well below the price. Resistance is seen at $74.55, while strong support is seen at $70.50, and major support is seen at $68.60 levels. RSI is on a negative downtrend sliding from 0.49 to 0.36 levels.

Natural gas traded lower posting a 4.5% loss to settle at $4.687. Strong support is seen at $4.47 levels. Resistances are seen at $4.837 and $ 4.940. RSI is showing a negative downtrend dropping from 0.63 to 0.49 levels. However, bargaining opportunities, declining inventories and the hot weather forecast may drive natural gas prices higher during the week.

Crude Oil

Early last week, crude oil traded lower on the speculation that tropical storm Alex wouldn't disrupt production in the Gulf of Mexico. Additionally, crude declined further on a decision by the leaders of the G20 lto continue with deficit-cutting measures on concerns related to the eurozone debt crisis.

A Department of Energy report showed oil inventories declining by 2.0 million barrels, while gasoline and distillate inventories rose 537,000 barrels and 2.5 million barrels, respectively. The report had a marginal negative impact on prices due to the unexpected rise in gasoline inventories.

U.S. consumer confidence data, which was below market expectations, resulted in crude oil prices declining further. Toward the end of the week, crude oil prices declined further on negative U.S. economic data showing higher-than-expected jobless claims.

Meanwhile, the decline in China's and the European PMI was higher than forecast, thereby indicating a slowdown in manufacturing activities worldwide.

BP ( BP) gained 8.6%, while other oil majors Exxon Mobil ( XOM), Chevron ( CVX), ConocoPhillips ( COP), and Total ( TOT) declined 4.3%, 3.9%, 6% and 3.1%, respectively.

Natural Gas

Early last week, natural gas prices opened lower on the forecast of cooler weather and speculation that tropical storm Alex wouldn't disrupt production in the Gulf of Mexico. Prices declined further following a drop in U.S. Consumer Confidence Index. However, natural gas prices rose mid-week on the forecast of hot weather for July, thereby escalating the demand for natural gas.

EIA reports showed a buildup in inventories by 60 Bcf, while market expectations stood at 65 Bcf. Natural gas traded higher on the lower-than-expected build in inventories. However, gas prices closed lower because manufacturing data and factory orders declined, while jobless claims increased.

Prices reached a high and low of $4.92 and $4.5, respectively before closing the week at $4.7, with a weekly decline of 4.5%.

-- Reported by Gregg Greenberg in New York.

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