Oil downslide gains momentum, hammered further below $48.00 handle

After rising to the highest level since July 5 on Friday, WTI crude oil slumped on Monday and erased some of its last week's strong gains as traders seemed to take some profits off the table following three weeks of sharp up-move from sub-$40.00 level. 

Currently trading at $47.70, down around 2.8%, the black gold snapped 7-days of winning streak as the latest data from Baker Hughes showed eighth straight weekly climb in US oil rig counts. 

The total number of US oil rigs have now reached the highest level since February 19 and is contributing to renewed worries of global supply glut, which caused a sharp drop in oil prices to a multi-year low earlier in 2016.

Adding to this, a broad based US Dollar recovery is also weighing on dollar-denominated commodities - like oil. 

Later during this week, fresh report from API and EIA on US crude stockpiles will provide fresh impetus, while the Fed Chair Janet Yellen's speech at the Jackson Hole Symposium on Friday would provide near-term direction for the greenback and eventually drive oil prices. 

Technical levels to watch

From current levels, $47.50-40 area seems to provide some immediate support, below which the commodity seems all set to extend its corrective move back towards $45.30-25 strong support with intermediate support pegged around $46.75-65 zone and $45.80-75 area.

On the flip side, recovery momentum back above $48.00/barrel mark now seems to confront strong resistance around $48.50 region, above which the a fresh leg of up-move is likely to boost the commodity back beyond $49.00 mark towards testing its next major resistance near $49.30-35 band.