WTI crude oil has been trending lower on its 1-hour time frame, now moving inside a descending channel and bouncing off the resistance. If the selloff persists, the commodity could drop until support at $45.50 per barrel.
However, the mid-channel area of interest appears to have kept losses in check as this lines up with the 200 SMA dynamic inflection point. The short-term 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, but a downward crossover looks imminent and this might draw more sellers back in.
Stochastic is heading up to show that there’s some bullish momentum left, probably just enough to spur another test of the channel resistance. RSI is also moving higher so WTI crude oil might follow suit. Once both oscillators hit overbought levels and turn lower, selling pressure could return.
There have been rumors that the OPEC could go for another extension of its output deal as Saudi Arabia’s energy minister met with counterparts from UAE, Kazakhstan, and Venezuela. Recall that the cartel already agreed to extend their production agreement by six months from the original end-date to March 2018.
In the US, refineries are already reopening and starting to process more crude oil barrels than they did prior to the shutdowns in Hurricane Harvey. This could lead to a large reduction in stockpiles for the reports from the American Petroleum Institute and the Energy Information Administration in the coming weeks.
The decision of the US to scrap the idea of an oil embargo for North Korean sanctions would also put some upside pressure on crude oil since it would mean less supply unused in the markets. Of course there’s also the chance that the new set of sanctions would be met with provocation from Pyongyang, which might then dampen risk appetite and demand for commodities.