Oil slides to $46.50, seems vulnerable to further downside

After an initial attempted recovery to the vicinity of $48.00 mark, WTI crude oil prices reversed sharply and erased all of its early gains and turned negative to currently trade at session low level, around mid-$46.00s.

Following over 5% slump on Friday after Brexit decision triggered a blood-bath across global markets, the black gold attempted a tepid recovery earlier during the day despite of broadly strengthening US Dollar. 

The recovery, however, was short-lived and got sold into, dragging the commodity back below $47.00 handle, shrugging-off Friday's data that showed the number of active oil rigs in the US fell for the first time in four weeks as strong US Dollar is seen hurting riskier asset classes – like equities and dollar-denominated commodities, including oil. 

While developments surrounding the critical Brexit referendum might continue to remain in the headline, oil traders now shift their focus to this week’s important data on weekly crude oil inventories by API on Tuesday and the official EIA report on Wednesday, which is likely to drive crude oil prices in the near-term.

Technical levels to watch

From current levels, the commodity seems to extend its slide towards monthly lows support around $46.00-45.80 level, below which a fresh leg of weakening trend is likely to drag it back below $45.00 psychological mark support, towards testing its next horizontal support around $44.50 region.

On the flip side, the commodity needs to build on to its recovery momentum above $47.00 round figure mark and move back above $47.50 in order to resume its previous bullish trend. A follow through buying interest above $47.50 resistance has the potential to boost it beyond $48.00 mark, towards its next major resistance around $48.70-75 region.