WTI crude oil is trending lower on its short-term time frame, moving below a descending trend line that’s been holding since the start of the month. Price seems to be finding resistance again and could be ready to resume the drop to the next downside targets.
The Fibonacci extension tool shows where sellers might be aiming. The 38.2% level is close by at $88.95 per barrel, then the 50% level is at $87.82 per barrel. Stronger selling pressure could take it down to the 61.8% Fib at $86.68 per barrel or the 76.4% level at $85.27 per barrel. The full extension is near $83 per barrel.
The 100 SMA is below the 200 SMA to signal that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. The gap between the indicators is even widening to reflect strengthening selling pressure.
Stochastic is on the move down to show that sellers have the upper hand, but the oscillator is already dipping into the oversold region to signal exhaustion. Turning higher would mean that buyers are returning and could push crude oil back above the trend line.
RSI has more room to head lower before reaching the oversold area, so price could keep following suit while bearish momentum is present.
Crude oil could take cues from inventory data, as this would signal whether demand is slowing or picking up. After a surprise build of 4.5 million barrels in the previous release, a smaller increase of 0.1 million barrels is expected this time.
A higher than expected gain would signal that purchases have slowed, possibly as businesses and consumers adjusted to more expensive fuel prices. On the other hand, a reduction in stockpiles might reassure crude oil bulls that demand remains elevated.
The upcoming US CPI release could also bring additional volatility for commodities since this impacts market sentiment.