WTI crude oil continues to trend higher on its 1-hour chart as it moves inside an ascending channel and tests the resistance. A pullback to support might follow, and the Fib retracement tool shows nearby support areas as well.
The 38.2% level lines up with the mid-channel area of interest at $56.51 per barrel while the 50% level is closer to the 200 SMA dynamic inflection point. The 61.8% level is at $55.11 per barrel and a larger retracement could take price down to the channel bottom at $54 per barrel.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. RSI is already turning up to show that buyers are regaining the upper hand and could even push price past the channel top for a steeper climb. Stochastic also seems ready to climb, reflecting a return in bullish pressure as well.
The Energy Information Administration is due to report its crude oil inventories later today and might print a draw of 2.7 million barrels versus the earlier reduction of 4.8 million barrels.
A larger than expected draw could mean that demand remains healthy and that oversupply isn’t a major concern. On the other hand, a surprise build could mean a decline in crude oil prices, especially since stockpiles have been printing larger than expected draws in consecutive weeks. Then again, the hurricane season could lead to some shutdowns in pipelines and curb supply in the months ahead.
Keep in mind, however, that China has included this commodity in products targeted by retaliatory trade measures, so global demand might remain subdued. Nonetheless, the commitment of Saudi Arabia’s new energy minister to their output deal and alliance with Russia seems to have assured crude oil bulls.