WTI crude oil is starting to seal its breakout from the channels visible on the short-term and long-term time frames. This confirms that a longer-term climb is underway as fundamentals also support stronger commodity prices.
Last week, a meeting between OPEC and non-OPEC energy ministers yielded stronger pledges to curb output, although these promises have yet to be formalized. Another OPEC meeting is set to happen in Abu Dhabi next week and Saudi Arabia is highly expected to encourage better compliance among member nations. If the outcome is positive, further crude oil prices could be in the cards.
The 100 SMA is above the longer-term 200 SMA on the 4-hour time frame to signal that the path of least resistance is to the upside. This moving average is in line with the short-term channel support to add to its strength as a floor in the event of a correction.
WTI crude oil has successfully broken past the 61.8% Fib, which as been seen as the line in the sand for the downtrend. Price is now testing the $50 per barrel psychological level and a move to the $51 per barrel area could signal that bulls have taken control.
Stochastic has been indicating overbought conditions for quite some time and is turning lower to signal a return in selling momentum. RSI is also pointing down and ready to head south so WTI crude oil might follow suit.
The attention now turns to the inventory data from the American Petroleum Institute and the Energy Information Administration. Another larger than expected draw in stockpiles could put more upside pressure on crude oil as this would further global oversupply concerns and would be indicative of strengthening demand.
Data from China has been mostly in line with estimates to signal that demand is also sustained. This is usually positive for commodities in general since China is the world’s second largest economy.
Apart from that, US sanctions on Venezuela is adding upside pressure to crude oil. This would put a ban on crude oil shipments from the country and force the US to use more of its supply.