WTI crude oil continues to consolidate as the commodity bounced off the nearby resistance around $49.75 per barrel and is making its way back to support at $48.50 per barrel.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. With that, a break of support could be possible, sending WTI crude oil down by around $1.50 or the same height as the rectangle pattern. However, the moving averages could also be oscillating to reflect consolidation conditions.

Stochastic is already indicating oversold conditions, which means that sellers are starting to feel exhausted. If they let buyers take over and the oscillator climbs above the oversold region, another bounce to the top of the range could be seen. RSI is treading sideways to indicate consolidation and is edging close to the oversold area as well.

Earlier today, the American Petroleum Institute reported another large draw in crude oil stockpiles, easing global glut fears. There hasn’t been much announcements from the OPEC meeting on August 7-8, which explains the lack of direction in WTI crude oil so far.

Later this week, the Energy Information Administration is scheduled to print its own numbers and another reduction in stockpiles could drive crude oil higher. Analysts are expecting to see a draw of 2.6 million barrels.

Geopolitical risk is currently weighing on commodities recently as North Korea has threatened to launch a missile strike on Guam, the nearest U.S. territory in the Pacific. Trump has mentioned that any action will be met with “fire and fury” so investors are wary of worsening conflict between the two nations, possibly increasing the risks to trade and growth.

Looking ahead, market sentiment could determine which way crude oil might break out, although the inventory data could still have a strong say. Later on in the week, the Baker Hughes oil rig count could provide a leading indicator of demand and supply while the US CPI report could also influence market sentiment.