WTI crude oil has formed lower highs and higher lows to consolidate inside a symmetrical triangle visible on its 4-hour chart. Price is approaching the bottom of the chart pattern to test support.

If the $68 per barrel level is able to keep losses in check, crude oil could recover to the triangle top around $72 per barrel. A break below support, on the other hand, could set off a slide that’s the same size as the triangle pattern.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold. Crude oil is trading below both moving averages as additional confirmation of selling pressure.

However, stochastic is already indicating oversold conditions or exhaustion among sellers, so turning higher would signal that buyers are taking over.

Crude oil took hits when the EIA inventory report revealed a larger than expected build of 3.6 million barrels versus the estimated drop of 3.2 million barrels. This suggests that demand has weakened significantly, likely as businesses and consumers pared activity on Delta variant concerns.

Note that the OPEC also agreed to boost production by 400K barrels per day this month until December, boosting global supply. This comes at a time when some countries are reinstating lockdown measures to curb the spread of the virus.

The next main catalyst would likely be the US NFP release since this would impact rate expectations and overall market sentiment. Traders are eyeing a slightly stronger increase in hiring for July, but leading indicators like the ADP report are suggesting otherwise.

A weak NFP read might convince traders that the Fed could keep stimulus in place for much longer, which would be positive for risk-taking and higher-yielding assets like commodities.