Bearish momentum is kicking into high gear for WTI crude oil as price broke below a short-term rising trend line. The commodity could be setting its sights on the longer-term channel support around $40 per barrel next.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the selloff is more likely to continue than to reverse. The 200 SMA coincides with the top of the falling channel around $50 per barrel, adding to its strength as a ceiling. Price has just broken below the 100 SMA to confirm a pickup in selling momentum and a potential downward crossover that could draw more sellers in.

RSI is on the move down and has some room to go before hitting oversold conditions. Stochastic has also moved lower but is already dipping into the oversold area to signal potential profit-taking among sellers. In that case, a bounce back to the channel resistance and broken trend line around $48 per barrel could happen.

Risk aversion seems to be weighing heavily on commodities, along with the NAFTA renegotiations. Crude oil seemed to shrug off the larger than expected draw of 8.9 million barrels in stockpiles as reported by the Energy Information Administration, indicating that other market factors are coming into play.

Underlying data also revealed that US production is ticking higher, keeping oversupply concerns in place. Production jumped by 79,000 barrels per day to 9.5 million bpd last week, its highest level since July 2015, and 12.75 percent above the most recent low in mid-2016.

With that, many are concerned that rising output in the US could overpower the output deal by the OPEC which has already been extended until next year. So far, there have been no moves from the oil cartel to lift exemptions on the output cap or to adjust production levels.

Overall market uncertainty is also dampening commodity gains across the board as traders are still wary of threats from North Korea and the political fallout in Washington.