Oil recovery gains momentum, moves back above $48.00 handle

Earlier during Asian session WTI crude oil prices sank to more than three week low before staging a recovery, on improving global risk appetite, and are currently trading above $48.00 mark.

On Tuesday, the black gold extended its slide for fourth straight day and dropped below $48.00 mark on rising worries over global supply glut. Adding to the recent worries of rise in the number of active oil rigs in the US, Tuesday's API report pointed towards a 1.2 million barrels increase in US crude stockpiles for the previous week and was way above consensus estimating a drop of 2.1 million barrel.

Later on Wednesday, official data from EIA is scheduled to release weekly inventory data, which is expected to show a decline of 2.26 million barrels. Moreover, oil traders will also confront the key event risk, the US Fed monetary policy decision, as a hawkish central bank would boost the greenback and eventually weigh on riskier assets / commodities, like oil.

Technical levels to watch

The ongoing recovery momentum now seems to face resistance near $48.70-75 zone, which if cleared should boost the commodity further towards $49.00 handle. In order to confirm resumption of the previous appreciating move, oil need to build on to its momentum above $49.00. On a sustained move above $49.00 handle, the commodity seems all set to surge pass $49.65-70 resistance and head back above $50.00 psychological mark resistance.

On the flip side, sustained weakness back below $48.00 handle, leading to a break below $47.75-70 support, now seems to drag it back towards testing a previous strong resistance, now turned strong support, near $47.00 level.