Crude oil prices came in under a heavy selling pressure in the American session, taking the barrel of West Texas Intermediate to sub-$50.00 levels for the first time since late March ahead of the Baker Hughes Rig Count. As of writing, the barrel of WTI was losing 2.45% at $49.50.
Although there were no fundamental triggers to note behind that sharp drop, the fact that the prices fell beneath the significant $50 level might have triggered heavy stops, generating a technical pressure. Unless the WTI recovers back above $50.76 (opening level), it's going to end every single day of the week with losses, losing more than 3$ on a weekly basis.
Oversupply worries remain as the main drag on oil as this week's data once again revealed that the production in the U.S. continued to expand. Furthermore, Saudi Arabia and Kuwait, key members of the Organization of the Petroleum Exporting Countries, are eager to extend the output agreement to the second half of the year, they require non-members to join as well. Meanwhile, Russia's Energy Minister Alexander Novak said that the situation has gradually been improving since the beginning of March and suggested an indecisiveness on their side.
Technical levels to watch
The former support level at $50 now acts as the immediate hurdle for the WTI ahead of $50.90 (daily high) and $51.90 (Apr. 5 high). To the downside, supports could be seen at $49 (psychological level), $47.85 (Mar. 20 low) and $47 (Mar. 22 low).