WTI crude oil already broke above the neckline of its inverted head and shoulders pattern on the 1-hour chart, confirming that a rally is underway.

The chart pattern spans around $10.00 in height, so the resulting climb could be of the same size. The 100 SMA just completed a bullish crossover above the 200 SMA, which means that the reversal is likely to gain traction. Price is also trading above both moving averages, so these could hold as dynamic support on dips.

However, stochastic is already turning lower from the overbought zone to signal that buyers might take over while exhausted sellers take a break. Similarly RSI is starting to turn lower from the overbought area to reflect a pickup in bearish momentum.

In that case, crude oil might still retreat to nearby areas of interest before gaining traction on its climb.

Crude oil drew support from a larger than expected draw of 6.4 million barrels in stockpiles versus the estimated reduction of 3.6 million barrels. This was also larger than the earlier draw of 1.5 million barrels, confirming that supply has taken a hit.

Imports averaged 5.8 million barrels per day last week, down by 48,000 barrels per day from the previous week. At 417.4 million barrels, US crude oil inventories are about 7% below the five year average for this time of year.

Recall that Hurricane Ida led to production facility shut-ins along the Gulf Coast and left a number still offline and waiting for repairs. Another tropical storm is on the horizon, and this might mean more downside pressure on supply in the coming weeks.

Keep in mind, though, that the OPEC continues to increase output by 400K barrels per day as agreed upon. This means that global supply is elevated, especially with China said to release its excess stockpiles soon.