WTI Crude oil prices closed last week back at the resistance level area of 57.87 – 57.59. The two day rally by Friday’s end managed to pare the losses from the previous day.

Oil prices have barely moved since the OPEC meeting held late November.

OPEC member nations agreed to cut production until end of 2018. However, this was widely expected by the markets.

As a result, oil prices did not react much to the news.

The fact that WTI crude oil prices have been consolidating near the resistance level potentially shows that we could see a temporary top being formed.

With oil prices closing at $57.33 a barrel on Friday, we expect to see that the lower high currently formed will be in place.

As long as oil prices don’t breakout above the 57.87 resistance, there is more validation for a downside move in oil prices.

The Stochastics oscillator however shows the potential for some more gains in the near term.

The rally from the previous lower resistance level at $52.25 – $51.82 saw oil prices posting a steady gain to the current resistance level.

This exposes this lower resistance level which could be tested for support in the near term.

The decline to $52.85 – $51.82 could potentially signal a short term correction in price.

Therefore, look for oil prices to post a decline following the retest back to the resistance level.

As long as oil prices do not post a convincing bullish close above $57.87, we can expect to see the downtrend resuming.

A retest to the $52.25 support level will mark the correction which could then pave way for further gains that could push oil prices past the current highs near $57.87.