Crude oil has been bullish for more than a year, since it reversed in April 2020. As a result, oil climbed to $77 by the first week of July, with moving averages doing a great job as support on the daily chart, particularly the 20 SMA (gray) and the 50 SMA (yellow), which started pushing the price higher from the middle of last month.

But the 50 SMA was finally broken to the downside last month, after we saw a reversal down and a quick crash, which took the price nearly $12 lower. But, the 100 SMA (green) came to the rescue on this time-frame chart, and turned into support, holding the decline for US WTI crude oil.

Crude oil bounced off that moving average, and we saw a quick bullish move in oil, sending the price above $74. But, oil couldn’t make higher highs, which was a sign that the bullish trend had not resumed yet. Instead, oil reversed lower as soon as August started, falling below the 50 daily SMA again.

US WTI Crude Oil Live Chart 

OPEC’s decision to increase crude oil production in August turned the commodity softer, despite the global economy being in a fast-expanding period. Now, worries about new restrictions, due to the Delta coronavirus variant, are hurting the sentiment in the oil market, which is pushing crude oil lower.

The 50 daily SMA turned into resistance for oil last Friday, which is a sign that sellers are in control for now. They pushed below the 100 SMA briefly, but July’s low held as support again, and now the price is trading around the 100 SMA. If this moving average and last month’s low get broken, then oil will be heading for lows of $60. Restrictions in China are a major cause for concern, with manufacturing activity just above stagnation, so there is a strong case for oil to break the 100 SMA today.