Oil breaks below $48.00 handle, erases majority of its weekly gains

WTI crude oil is seen extending its reversal for second consecutive day from $50.00 handle touched earlier during the week and has now dropped back below $48.00 /barrel mark. 

After today's slide, the black gold has now reversed all of its Wednesday's gains led by a steeper-than-expected drawdown in US crude oil inventories. Given the rise in number of oil rig counts digging oil in the US, which might again lead to rise in crude oil production and resurface global supply glut, traders seem to have turned skeptic over the prospects of further appreciation for the commodity. 

Hence, today's focus will remain firm on the US rigs count data along with the release of US ISM manufacturing PMI data that would assist traders to grab some short-term tradable moves.

Technical levels to watch

From current levels, the slide seems to get extended towards $47.60-50 horizontal support, below which the commodity seems to easily break through $47.00 handle support and head towards testing $46.50 support area. A follow through selling below $46.50 has the potential to drag oil prices below recent lows support (sub-$46.00 level), towards testing sub-$44.00 level in the near-term.

On the flip side, recovery momentum back above $48.00 handle now seems to confront immediate resistance near $48.30, which is closely followed by session high resistance near $48.55-60 area. Momentum above session high should now assist the commodity to move back above $49.00 handle and head towards retesting weekly high resistance near $49.50-55 area.