WTI crude oil sealed the deal for its downside breakout from the ascending channel, confirming that losses are in the cards. Price hasn’t made signs of pulling back up to the broken support area around $48/barrel just yet, which indicates that bearish pressure is really strong.

The 100 SMA is gearing up to cross below the 200 SMA to reflect the pickup in selling momentum. This could draw more sellers in, thereby fueling the decline. However, stochastic is already indicating oversold conditions so sellers might want to take a break and let buyers take over. Similarly, RSI is in the oversold zone and pulling up would draw bulls back in.

Warnings of a commodity price rout led to a sharp crash in crude oil on Thursday as the OPEC remains hesitant about implementing additional production cuts or extending their output deal until the end of the year. Energy ministers are still scheduled to meet before the end of this month and their decision or bias could have a large say in crude oil trends.

Although US inventory reports showed declines in stockpiles lately, traders appear to be hoping for larger drawdowns to gain some assurance that oversupply troubles will abate. However, reports have also indicated that the increase in US rig counts over the past quarter are likely to result to more output and therefore downside pressure on prices.

To top it off, Chinese PMI readings have been mostly disappointing, leading many to speculate about a downturn in demand down the line. This, combined with rising supply, would further dampen crude oil gains.

Zooming out to the daily chart shows a bit of a head and shoulders pattern for WTI crude oil and that it has already broken below its neckline to confirm that a long-term downtrend is underway. Some analysts have gone as far as predicting $30/barrel crude oil but it’s hard to imagine that the OPEC won’t take action before that happens.