Oil recovers from 2-month low, jumps to $45.50

Recovery momentum in WTI crude oil gained further traction during mid-European trading session, boosting the commodity further beyond $45.00 mark. Oil traders now look forward to API report on US crude supplies for fresh impetus.

A broadly weaker US Dollar is driving investors towards riskier assets and boosting demand for dollar-denominated commodities, including oil, helping the commodity to recover from a two-month low touched in the previous trading session.

On the first trading day of the week, the commodity dropped to its lowest level since May 11 on renewed worries over global supply glut after the latest data showed continuous pick-up in US oil drilling activity. 

Going forward, the commodity would continue to be driven by the latest inventory data from the US that includes - API report on Tuesday and the official EIA inventory data on Wednesday. 

Meanwhile, the medium term trend would be determined after the passage of this week's key macro data from world's largest consumer of commodities, China, and the much awaited BoE monetary policy decision on Thursday. This week's Chinese data includes, trade balance data on Wednesday and quarterly GDP data on Friday.

Technical levels to watch

From current levels, previous strong support near $45.90-46.00 handle now seems to act as immediate resistance, above which the commodity seems to extend the bounce further towards $46.60-80 strong resistance. Meanwhile on the downside, sustained weakness back below $45.00 handle would now open room for continuation of the near-term depreciating move towards 100-day SMA support near $43.50-40 region.