Oil holding steady with minor gains at $49.30, eyeing Brexit vote

On Thursday, WTI crude oil opened higher on optimism over Brexit vote but has now trimmed its gains to currently trade back close to opening level of $49.20.

Global risk-on supported oil prices during Asian trading session. However, the gains remained limited as the effect of a modest reduction in the US crude stockpiles is seeing weighing on the investor sentiment. Moreover, traders are likely to remain cautious ahead of the final outcome of the EU-referendum vote in the UK, likely to be announced early UK time on Friday.

On Wednesday, oil reversed sharply and dropped below $48.50 after the EIA report showed US crude inventories decreased by only 917,000 barrels last week, which was well above the expected drawdown of 1.3 million barrels and far less than the 5.2 million barrel reported by API.

A lower-than-expected inventory drawdown seems to have resurfaced concerns over a global supply glut and might hinder the commodity's ongoing bullish momentum.

Technical levels to watch

Weakness back below $49.00 mark seems to drag it back towards $48.30 support, which if broken would open room for extension of the near-term corrective move. Below $48.30 support, the commodity seems vulnerable to drop back towards retesting sub-$46.00 level, last week’s low support, with $47.50 and $47.00-$46.80 area acting as intermediate support levels.

On the flip side, the commodity needs to regain momentum above $50.00 in order to negate the near-term bearish expectations. A sustained move back above $50.00 psychological mark now seems to assist it back towards June closing highs resistance near $$51.50-60 area before extending the upward trajectory towards its next major resistance around $53.40-50 area.