WTI plummets to fresh session lows, below $47.50

WTI crude oil surrendered early gains and turned sharply lower for the fifth consecutive session, plunging over $1.00 from session tops near $48.50 region.

Political tensions between major Middle Eastern oil producing nations, after Saudi Arabia, UAE, Bahrain and Egypt snapped diplomatic and commercial ties with Qatar over terrorism support charges, now seems to have raised skepticism over a global deal to reduce oil production. 

The latest development added to worries led rising crude output in the US, which were further aggravated by the latest Baker Hughes report on Friday that showed a record 20th straight weekly jump in the US oil rig count. In fact, the total number of rigs in the US drilling oil climbed by 11 in the week to June 2, the most since April 2015, to 733 and further fueled concerns over the effectiveness of the current OPEC-led production cut deal. 

Meanwhile, a positive tone surrounding the US Dollar was also seen weighing on the dollar-denominated commodity and collaborated to the commodity's retracement back below $47.50 level. 

With today’s fall, the commodity so far has lost in excess of 8.0% and reemergence of selling pressure on every recovery attempts clearly suggests that the near-term downward trajectory might still be far from over. 

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Technical levels to watch

Immediate support is pegged near $47.20-15 region, below which the commodity seems to break below the $47.00 handle and head towards testing $46.80-70 important horizontal support. 

On the upside, any recovery moves back above the $48.00 handle now seems to confront resistance near $48.45-50 region, which if cleared decisively could trigger a fresh bout of short-covering and lift the commodity beyond $49.00 mark towards its next hurdle near $49.30 level.