WTI crude oil is testing the top of its descending channel resistance but looks prime for a break higher. If so, a reversal from the selloff could follow.

However, if resistance holds, crude oil could slide back to the downside targets marked by the Fibonacci extension tool. The 38.2% level lines up with the mid-channel area of interest at $65 per barrel then the 50% level is near the minor psychological $63.50 per barrel mark.

Stronger selling pressure could take it down to the 61.8% level at $62 per barrel or the 76.4% level that lines up with the channel bottom. The full extension is at $57.27 per barrel.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. Stochastic is already turning lower from the overbought zone to suggest that sellers are taking over while buyers take a break.

Expectations that Hurricane Ida could restrict crude oil production are driving up price pressures since demand could stay more or less supported.

Ida was upgraded to a Category 4 hurricane by the US National Hurricane Center Aug. 29 with maximum sustained winds of 150 mph before making landfall south of New Orleans. This would make it one of the most powerful storms to ever hit the US Gulf Coast.

The upcoming OPEC-JMMC meeting might also impact crude oil price action, especially if the committee recommends adjustments to the output deal. Recall that the cartel agreed to increase output by 400K barrels per day from August to December this year, but the drop in purchases owing to lockdown measures in some nations might spur a global supply glut.

The lack of any potential adjustments could keep a lid on crude oil prices, as traders continue to keep an eye on the Delta variant spread worldwide.