Crude oil prices moved higher last week after experiencing steady losses since the beginning of the month. On Friday, the commodity moved sharply higher after energy firms cut drilling rigs by the largest amount since January. Commercial-grade inventories in the United States have also fallen about 13% from their March highs to 466.5 million barrels. The reduced rig counts and falling inventories suggest that the market may be tightening.

Traders will be closely watching OPEC's technical meeting with non-cartel members to discuss levels of compliance with the cartel's deal to cut production. Last year, OPEC and 10 non-OPEC producers agreed to cap production at 1.8 million barrels per day lower than peak October 2016 levels in an attempt to reduce the oil glut and boost prices. However, compliance with the deal has wavered, as production increased in Iran and the United Arab Emirates, among other producers. (See also: OPEC to Look at Extending Oil Production Cuts.)

The United States Oil Fund (USO) is among the most popular equities tracking crude oil prices.

Technical chart showing the performance of the United States Oil Fund (USO)

From a technical standpoint, prices rebounded from trendlinesupport and the 50-day moving average at $9.55 to nearly $10.00 before falling to the pivot point at $9.88. The relative strength index (RSI) remains neutral at 51.78, while the moving average convergence divergence (MACD) remains in a bearish downtrend. These dynamics suggest that traders should maintain a bearish bias on the commodity.

Traders should watch for a breakdown below the pivot point to retest the trendline support and the 50-day moving average. A breakdown from these levels could send prices to retest lows at around $8.75. A breakout from the pivot point could send prices to upper trendline resistance at around $10.25. If shares break out from these levels, the next key resistance level is the 200-day moving average at $10.47. (For more, see: Capex Cuts Are Back: What's in Store for Energy ETFs?)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.