WTI crude oil is trending lower on its 4-hour time frame but is still in the middle of a correction from its downtrend. Price is now testing the mid-channel area of interest near the 38.2% Fibonacci retracement level.

If this holds, the commodity price could fall back to the swing low near $62 per barrel or lower. A larger pullback, on the other hand, could reach the 61.8% Fib at $69.51 per barrel near the channel top and 200 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA is below the 200 SMA to confirm 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 widening to signal strengthening selling pressure.

Stochastic has been indicating overbought conditions for quite some time, which means that buyers are exhausted and ready to let sellers take over. In that case, crude oil could resume the drop to the swing low or the channel bottom once the oscillator turns south.

WTI crude oil could see a decline of 1.9 million barrels in stockpiles of the EIA report, smaller than the earlier draw of 3.2 million barrels. An even smaller reduction or a surprise build might signal a downturn in demand, likely weighing on the commodity price.

On the other hand, a large draw could signal that purchases remain supported even with concerns about the Delta variant. Keep in mind, though, that global supply remains elevated due to the OPEC agreement to increase production by 400K barrels per day starting this month until December.

Risk appetite in relation to monetary policy might also impact crude oil movements by the end of the week. Traders will be taking cues from Fed head Powell’s speech when it comes to speculating about global borrowing costs.