WTI crude oil is trending lower on its hourly time frame, moving inside a falling channel and currently testing resistance. If it holds as a ceiling, the commodity price could resume the drop to the downside targets marked by the Fibonacci extension tool.
The 38.2% extension is at $77.24 per barrel, then the 50% level lines up with the swing low at $75.61 per barrel. Stronger selling pressure could take it down to the 61.8% extension at $73.97 per barrel or the 76.4% level at $71.95 per barrel near the channel support. The full extension is at $68.68 per barrel.
The 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside, confirming that the selloff is more likely to gain traction than to reverse.
Stochastic is on the move down, confirming that selling pressure is in play, but the oscillator is dipping into the oversold region to signal exhaustion. Turning higher would mean that buyers are taking over, possibly leading to a break above the channel top around $82 per barrel.
RSI has more ground to cover on its move south to the oversold region, so bearish momentum could continue until it does.
Crude oil could take its cues from inventory data to be released by the Energy Information Administration. Analysts are expecting to see a smaller draw of 2.6 million barrels versus the earlier reduction of 5.4 million barrels.
A larger draw could signal that demand remains elevated or that production is struggling to keep up, possibly leading to a stronger rally for crude oil. On the other hand, a surprise build might point to weaker purchases, likely leading to a selloff.
Earlier on, the API reported a larger than expected draw of 4.8 million barrels versus the expected reduction of 2.2 million barrels, so the EIA figure could print similar results.