WTI crude oil is testing the top of its descending channel on the hourly time frame, and holding as resistance could send it back down to the bearish targets marked by the Fib extension tool.

The 38.2% level is at $70.53 per barrel near the mid-channel area of interest, then the 50% level is just slightly above the $70 per barrel mark. Stronger selling pressure could take crude oil down to the 61.8% level at $69.66 per barrel or the 76.4% extension near the channel bottom. The full extension is at $68.24 per barrel.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are more likely to hold than to break. However, the gap between the indicators is narrowing to reflect weakening bullish momentum and a potential bearish crossover.

RSI looks ready to head lower without reaching the overbought zone, indicating that sellers are eager to take over. The oscillator has plenty of room to move south, so price could follow suit until oversold conditions are met.

Stochastic is indicating overbought conditions or exhaustion among buyers, which suggests that bearish pressure could return soon.

The EIA reported a larger than expected draw of 4.6 million barrels in stockpiles of crude oil versus the expected reduction of 1.5 million barrels.

This was also a much larger draw compared to the previous reduction of 0.2 million barrels. This suggests that demand remains strongly supported, even with the concerns surrounding the Omicron variant and related travel restrictions.

Risk appetite also seems to have returned, following the profit-taking after the FOMC decision. The central bank signaled scope for three hikes next year, reflecting an optimistic outlook that boosted demand for higher-yielding assets like commodities.

Fed head Powell shifted his stance to acknowledge that inflation could be more persistent, thus warranting more tightening moves soon.