WTI crude oil is trading inside a descending channel on its hourly time frame. Price is testing the resistance and could be due for a move back to nearby support levels.

The mid-channel area of interest is around $52.50 per barrel then the channel bottom is at $51.50 per barrel. The 100 SMA is still above the 200 SMA, though, suggesting that the path of least resistance is to the upside or that there’s a chance the channel top might break.

If that happens, a steeper climb might follow. Then again, the gap between the moving averages is narrowing to reflect slowing bullish momentum and a potential bearish crossover, which might draw more sellers back in.

Stochastic has been indicating overbought conditions for quite some time, and turning lower would mean a return in selling pressure. RSI also looks ready to move south, so bearish momentum might pick up and drag crude oil prices back down.

Risk appetite has been boosting crude oil prices as traders are easing up on political concerns now that President-elect Biden is about to be inaugurated. A surge in risk-on flows could spur a break past the resistance at $53.50 per barrel and be followed by a steeper climb.

The vaccine rollout in several countries is also impacting crude oil price action since this could bring about an earlier return to normal business conditions. Of course concerns about the new strain of the virus making its way to more nations is keeping gains in check.

The upcoming inventory report would likely influence crude oil direction this week as well, as a draw in stockpiles would reflect stronger demand for the commodity and thereby bring some price upside. A build, on the other hand, would suggest that businesses are hesitant to load up on fuel and energy commodities as pandemic concerns remain in play.