A short-term reversal signal can be seen for WTI crude oil as price formed an inverse head and shoulders pattern. This means that further gains are in the cards, especially since the commodity has broken past the neckline resistance and completed a quick pullback.

The chart formation spans $49.50 per barrel to $51 per barrel so the resulting rally could be of the same size, probably taking crude oil up to $52.50 per barrel next.

The 100 SMA has crossed above the longer-term 200 SMA on the 1-hour chart to signal that bulls are gaining momentum and could be strong enough to sustain the rally. The moving averages have also held as support in the recent correction and might continue to do so.

However, stochastic is already indicating overbought conditions and looks ready to turn lower. In that case, WTI crude oil could be in for another short-term pullback to gather more energy among bulls. RSI also seems to be heading lower so crude oil might follow suit.

Dollar weakness has contributed to crude oil price gains in the past few days as lingering doubts over a December hike or more tightening moves next year has kept businesses hopeful that borrowing costs will remain low. In turn, this could inspire sustained demand for commodities like crude oil.

Agencies have projected that global demand for the commodity will increase next year and the looming possibility of an OPEC output deal extension is also contributing to price gains. Non-member nations have also expressed support for this idea, which might make the agreement more effective.

Looking ahead, the focus will return to inventory levels in the US, in particular to rising export levels. Although Saudi Arabia pledged an export cut in November, global glut concerns remain in play while US drillers increase their shipments. In any case, another large draw in stockpiles could still keep the commodity afloat.