WTI crude oil continues to edge higher but is also consolidating in a rising wedge formation. Price is currently testing the resistance and could be due for a dip back to support.

The 100 SMA is still above the longer-term 200 SMA to signal that the path of least resistance is to the upside. In other words, the uptrend is more likely to continue than to reverse. The short-term moving average also lines up with the wedge support, adding to its strength as a floor.

A larger pullback, on the other hand, could reach the 200 SMA dynamic support just above $50 per barrel. Stochastic is just starting to turn lower to reflect a pickup in selling pressure while RSI also appears ready to move lower so WTI crude oil might follow suit.

The American Petroleum Institute reported a larger than expected drop in stockpiles of 7.130 million barrels. Gasoline inventories saw a surprise build of 1.941 million barrels for the week ending October 13, against an expected draw of 340,000 barrels.

Apart from that, the Iran situation is also causing some upside pressure on crude oil as production is expected to be disrupted. The referendum continues to pit Turkey, Iran, and Iraq governments against the Iraqi Kurds and if tensions escalate, a civil war could break out and further limit supplies.

Up ahead, the Energy Information Administration will report its inventories and probably print a draw of 4.7 million barrels. Another larger than expected reduction could lead to more gains for the commodity. Keep in mind that inventories at Cushing, Oklahoma, site fell by 151,000 barrels this week.

Market sentiment and dollar price action could continue to influence crude oil direction in the near-term, especially after the inventory reports are already printed. Increasing expectations for Fed tightening in December and throughout 2018 could keep a lid on the commodity’s gains while indications that the central bank could slow down its pace would keep it supported.