Crude oil is still on a tear as price has surged past the $60 per barrel mark and is closing in on the next upside targets. Zooming out to the weekly time frame shows a nearby ceiling around $62 per barrel.

The 100 SMA is still below the longer-term 200 SMA on this time frame, which suggests that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Also, the 200 SMA appears to be holding as dynamic resistance at the moment and could continue to keep a lid on gains.

Still, it’s also worth noting that the gap between the moving averages is narrowing to reflect weaker bearish pressure. This could lead to a crossover soon and might encourage more bulls to join in.

Stochastic is already in the overbought region and is starting to turn down, likely indicating a pickup in bearish momentum. RSI has a bit more room to climb so crude oil might still reach the next psychological barrier before turning back down. If that happens, crude oil could dip to the short-term support zones.

According to the US Energy Department, crude oil stockpiles fell 4.6 million barrels in the previous week, a larger draw than expected and enough to ease oversupply concerns somewhat. This also follows a shutdown of a pipeline in Libya, which also means lower production from the OPEC member nation as well.

Apart from that, China reported strong import quotas for 2018 as stockpiles in November  hit a seven-year low of 26.15 million tonnes. This increase in demand would be another strong market factor propping prices higher, on top of the OPEC output deal that was extended until the end of 2018.

Keep in mind, however, that the cartel has hinted about a review of their agreement in June if the market overheats by then. With that, any remarks from OPEC officials on this matter could lead to a huge reaction from the commodity.