Oil Drops Sharply, Back to $45.00 Handle
As the US session got underway, WTI crude oil
futures turned sharply lower, retesting $45.00/barrel mark as investors
seems to take some profits off the table after the commodity's sharp
rise in April.
Even as the US ISM manufacturing PMI fell
short of expectations, the US Dollar gained some strength against its
major rivals, dragging commodities (including oil) lower. The US ISM
manufacturing PMI unexpectedly fell to 50.8 in April (expected 51.4),
indicating a slower pace of expansion in April.
Technical levels to watch
On
a sustained weakness below $45.00/barrel mark, the commodity is likely
to witness additional pressure, which could drag it to its previous
strong resistance, now turned immediate strong support, near $44.30-20
area. With daily RSI reading turning back from slightly overbought
conditions, prospects of a corrective move seems higher.
Meanwhile
on the upside, crude oil prices need to move back above $45.80-$46.00
mark in order to resume its near-term upward trajectory. Above $46.00
mark, the commodity seems to head back towards Friday's high level
resistance near $46.75 ahead of $47.00 round figure mark and Nov. 2015
daily closing high near $47.50-60 resistance levels.
