WTI crude oil is enjoying stronger bullish momentum these days on talks of another OPEC deal extension. Traders were able to shrug off the buildup in stockpiles reported by both the American Petroleum Institute and Energy Information Administration in anticipation of large declines in the next weeks.
Price is still safely inside its ascending channel formation on the 4-hour time frame and is bouncing off support. WTI crude oil could be eyeing a test of resistance at the $52 per barrel level, which lines up with the longer-term range resistance.
However, the 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, there’s still a stronger chance of the selloff resuming than for the uptrend to last. Then again, this could simply mean that the range resistance is more likely to hold than to break.
Stochastic is already turning down from the overbought zone to signal a return in bearish pressure. RSI, on the other hand, has room to climb so bulls could stay in control for a bit longer. At the moment, the longer-term 200 SMA appears to be holding as dynamic resistance.
In addition, the upgrade in global demand forecasts by the EIA and the OPEC appear to have led to a strong boost for the commodity. OPEC also reported a drop in compliance from 86% to 83% in August but this was overshadowed by the decline in August production by 79K barrels per day, mostly due to a reduction from Kuwait and Libya.
Apart from that, the decision to scrap the oil embargo from the list of proposed sanctions by the US to North Korea has also led to a bit of support for crude oil since this would mean less of the commodity floating around the global market left unused.
Looking ahead, market sentiment and dollar price action could also have a strong impact on crude oil movements. Leading inflation indicators for the US have been strong, reviving expectations of a Fed hike before the end of the year, which might then dampen demand for energy.