WTI crude oil continues to tread lower and is currently testing the bottom of its descending channel pattern on the 1-hour chart. A bounce could still take it back to the top of the channel around $48 per barrel but a break lower would trigger a steeper selloff.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the selloff is more likely to carry on than to reverse. In addition, the moving averages are just below the top of the channel, adding extra layers of resistance along the way.

Stochastic is indicating overbought conditions, though, so sellers might need to take a break and let buyers take over from here. A bit of bullish divergence can also be seen as WTI crude oil price made lower lows while stochastic made higher lows.

RSI appears to be on the move up but is hesitating to head any higher, possibly signaling an increase in selling pressure and a break below $46 per barrel.

Data from the Energy Information Administration showed that stockpiles were reduced by 5.4 million barrels versus the projected decline of 1.8 million barrels. WTI crude oil bounced upon seeing the number and on headlines indicating that Hurricane Harvey is staring to weaken, but the commodity was unable to hold on to its intraday gains.

Many are still worried about the impact of the tropical storm on future oil inventory reports as stocks were likely higher with plenty of barrels kept offline while refineries in the US Gulf Coast were shut down. In addition, it will take some time before these refineries resume normal operations so there could be a glut for some time.

Dollar demand has also kicked into high gear across the board when the US Q2 GDP reading was upgraded from 2.6% to 3.0% versus the projected read at 2.7%. The ADP report printed a larger than expected gain in hiring, spurring positive expectations for the NFP and a likely increase in Fed rate hike odds.