WTI consolidating after Monday's sharp slide, API report in focus

WTI crude oil failed to build on early tepid recovery move and has now retreated back closer to $52.00/barrel mark.

On Monday, the black gold fell sharply to the lowest level since December 19, recording a loss of almost 4%, as 10th straight weekly rise in US rig counts resurfaced fears of global supply glut. The commodity, however, gained some respite on Tuesday after Iraq, in a statement (via Reuters), announced reduction in its oil production by 160,000 barrels per day since the beginning of January, in-line with the historic oil output cut agreement between OPEC-cartel and other non-OPEC producers. 

Meanwhile, resurgent greenback demand hindered additional recovery and confined the commodity just below mid-$52.00s. A strong US Dollar tends to weigh on dollar-denominated commodities - like oil. 

Investors now shift their focus to the API report, which is expected to show an increase of 1.75 million barrel in the US crude oil stockpiles for the week ended January 6. The official EIA data is scheduled for release on Wednesday. 

Technical levels to watch

Momentum above session peak resistance near $52.35-40 region is likely to accelerate the recovery move towards $53.00 handle above which the commodity seems all set to head back towards $53.55-60 strong horizontal resistance. 

On the downside, sustained weakness below $51.80-75 (yesterday's low) seems to drag the commodity immediately towards $51.50 support (Dec. 19 low), en-route its next major support near $50.90-85 region.