Oil drops to $47.50 as supply glut worries resurface

By FXStreet Following an intra-day spike above $49.00/barrel mark for the first time since Oct. 2015, WTI crude oil future has declined steadily, with prices extending its slide below Friday’s low level of $47.93.

The black gold has now dropped to session low level of $47.50 as fears of global supply glut resurface on subsiding worries over supply disruption from North America and Africa.

The recent rise in oil prices was led by worries over supply disruption on the back of Canadian wildfires, geo-political tension in Africa and economic crisis in Venezuela. However, market participants now seem to turn their focus back towards the global oil demand-supply dynamics, which has led to some corrective price action in the commodity.

Technical levels to watch

On a sustained weakness below $47.50, the commodity seems to extend its slide immediately towards $47.00 handle and the fall could further gets extended towards $46.40-35 support area.

On the flip side, $47.90-48.00 now becomes immediate resistance level to watch for. This is followed by a strong resistance near $48.50 horizontal level, which if conquered sets the stage for extension of the commodity’s near-term upward trajectory towards its next major psychological mark resistance near $50.00 handle.
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Source:: FX Street