TenkoFX - Analytics

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Oil struggling to find direction, holds above $49.00 handle

After an initial drop to $48.83 during early Asian trading session, WTI crude oil regained its lost ground and turned flat to currently trade back above $49.00 handle. In the post-Brexit settlement period, the black gold continued gaining traction despite of a broad recovery witnessed around US Dollar. The ongoing geopolitical uncertainty in Nigeria has kept oil prices buoyant since Friday despite of Friday's data that showed continuing rise in US oil rig counts. Weaker US Dollar supported the initial leg of recovery up-move for the commodity on Friday. Adding to this, fresh news of militant group attacks in Nigeria, trigger a short-covering rally that lifted it back above $49.00 handle on Friday, ahead of an extended weekend in the US markets.Going forward, traders will continue to take trading cues from the weekly inventory report from the API and EIA before determining some near-term directional view from Wednesday's FOMC meeting minutes ahead of the most awaited US monthly jobs report on Friday.Technical levels to watchFrom current levels $49.45-50 region seems to act as immediate resistance, above which the commodity could make a fresh attempt to retest $50.00 psychological mark strong resistance. On the flip side, weakness below session lows support around $48.80, leading to a subsequent break below $48.40 support area, now seems to negate any near-term bullish expectations, turning it vulnerable to break below $48.00 handle and head towards testing $47.60-50 support area.



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