Oil reverses early gains, drops to $45.25 support area

By FXStreet WTI crude oil futures erased early gains and dropped back below $45.00/barrel mark to currently trade at day’s through near $44.25 level.

After a relentless rally from April lows of $35.22 all the way to $46.75, traders seem to take some profits off the table ahead of the weekly API report, due to be published later during the NY session. Moreover, disappointing Chinese manufacturing data released on Tuesday and renewed concerns of excessive supply also seems to contribute towards Tuesday’s decline.

Prices have now moved back to its previous strong resistance turned support near $44.30-25 area, marking 61.8% Fibonacci expansion level of $27.73-$42.46 upswing and subsequent retracement. A follow-up selling pressure might now trigger some near-term corrective move for the commodity.

Technical levels to watch

on a sustained weakness Below $44.30-25 support, the commodity seems to extend the weakness immediately towards $43.70-65 intermediate support before dropping back below $43.00 level towards testing its next major support near $42.40 area.

Alternatively, bounce back from current support level and a move back above $44.55-60 level seems to provide the required momentum to lift crude oil prices back above $45.00 mark.
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Source:: FX Street