WTI crude oil is trending higher on the 1-hour time frame and is currently testing support. Another bounce off this area could spur a test of the resistance, although the $71 per barrel is serving as a strong ceiling.
The 100 SMA is still above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. The 100 SMA lines up with the channel bottom to add to its strength as a floor, and the 200 SMA held as dynamic support on the dip.
However, stochastic is already indicating overbought conditions or exhaustion among buyers. Turning lower would mean that sellers are taking over and could attempt another break below support.
A move below the 200 SMA dynamic inflection point around $69 per barrel could confirm that a reversal is due.
RSI is pointing up to show that buyers have the upper hand, and the oscillator has room to go before reaching the overbought zone.
WTI crude oil continues to stay afloat, as the EIA report revealed a larger than expected draw of 5.2 million barrels in stockpiles versus the projected drop of 3.3 million barrels. This was also larger than the earlier reduction of 5.1 million barrels.
Higher-yielding assets like commodities could also enjoy more gains, as the latest US CPI did not spur stronger Fed tightening expectations. Although the readings turned out higher than consensus, the market reaction suggests that the figures are not high enough to warrant a shift to a more hawkish policy stance.
Note, however, that Saudi Arabia unwound its output targets faster than expected, possibly keeping global glut concerns present. The cartel agreed to keep their output deal but gradually increase production as demand picks up.