WTI crude oil is trending higher inside a rising channel on the 4-hour chart, and price is pulling back to the mid-channel area of interest. This seems to be holding as support since it lines up with the 38.2% Fib.
A larger correction could reach the 50% level that lines up with the channel bottom around $78.50 per barrel. The 61.8% level is slightly below the channel support at $77.73 per barrel, and this may be the line in the sand for an uptrend correction.
The 100 SMA is above the 200 SMA to confirm that support levels are more likely to hold than to break. If so, crude oil could recover to the swing high at $82.22 per barrel or higher. The channel resistance is located around $82.50 per barrel.
The gap between the moving averages is also widening to reflect strengthening bullish momentum. Stochastic is pulling higher without reaching the oversold region, suggesting that buyers are eager to take over. RSI appears to be on the move down, though, so a deeper pullback might be possible.
Crude oil could take cues from the Department of Energy’s inventory report, which is slated to show a smaller build of 1.1 million barrels compared to the earlier increase of 2.3 million barrels. This might reflect stronger demand conditions, as more businesses reopened and consumers resumed normal spending.
Also, supply might have been limited in the past weeks on account of weather disturbances. A surprise draw might mean strong upside for the commodity, as this would reinforce the supply crunch narrative.
Keep in mind that demand in other parts of the globe like Europe and Asia is picking up while supply has been dampened by weather disturbances. Also, the OPEC refrained from increasing production, so upside pressure on prices could stay in play.