WTI drops in Asia, rising crude supplies weigh

FXStreet (Mumbai) - The US oil resumes its broader downside momentum, reversing more than half of yesterday’s relief rally, as the underlying supply glut worries and recent actions from Saudi Arabia weigh heavily on the investors’ minds.

WTI back towards $ 37

Currently, WTI drops -1.80% near fresh session lows of 37.15, failing once again to resist 38 barrier. Oil prices were sold-off in Asia, fading a solid recovery seen on Tuesday, as the bigger picture for the black gold remains bleak amid persisting oversupply worries while the budget cuts by Saudi Arabia, the world’s largest oil producer, points to further weakness in oil next year.

Moreover, oil also dropped as markets react negatively to the latest API report which showed that US crude inventories rose by 2.9M barrels last week, after having fallen by 3.6M the prior week.

On Tuesday, oil prices witnessed a short squeeze after the sharp fall seen on the first day of the final trading week of 2015. Meanwhile, markets now await EIA stockpiles report for fresh cues on the commodity.

WTI Oil Technical Levels

WTI oil has an immediate resistance which stands at 38 (round number) above which gains could be extended to 38.58 (Dec 8 High). While to the downside, the immediate support is at 36.60 (Dec 28 Low), below which the prices could drop to 36.28 (Dec 23 Low).

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