WTI crude oil is crawling slightly lower as it waits for more catalysts to boost it back up. Price is moving in a small descending channel visible on its 1-hour and 15-minute time frames.
The small channel support is located near the ascending channel connecting the lows for the past few months. Stochastic is still pointing down to indicate the presence of selling pressure. RSI also seems to be moving down so crude oil could follow suit.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. The 200 SMA is also close to the ascending trend line, adding to its strength as support. The gap between the moving averages is narrowing to signal weakening bullish momentum.
If sellers take over, WTI crude oil could attempt to break below the trend line support and mark the start of a downtrend. If support around $56 per barrel holds, price could recover to the highs around $48 per barrel.
Baker Hughes reported another increase in US oil rig counts last week, indicating that producers are ramping up operations to take advantage of rising crude oil prices. This could lead to a buildup in crude oil stockpiles as reported by the American Petroleum Institute and the Energy Information Administration this week.
If so, crude oil could keep up with its correction for the next few days until the OPEC meeting draws closer. The cartel is widely expected to announce an extension of its output deal until the end of 2018 but they could find reason to pause now that the commodity has been advancing and global demand is projected to increase next year.
Crude oil is also drawing some support from Middle East tensions since these are expected to keep a lid on production. At the same time, the anti-corruption purge in Saudi Arabia is still helping keeping the commodity afloat.