Oil retraces back below $47.00 mark after two consecutive days of strong rally

After rising for two consecutive session a touching a two-week high level of $47.71, WTI crude oil reversed part of Thursday strong gains and dropped to $46.40 before bouncing off session low to currently trade around $46.80 level. 

On Thursday, the black gold surged after EIA report unexpectedly showed a decline of 14.5 million barrels in US crude oil inventories during the week ended September 2, confirming a drawdown of 12.1 million barrels reported by API earlier.

A broadly strong greenback, as measured by the overall US Dollar Index, has been the key factor weighing on dollar-denominated commodities and exerting some profit-taking selling pressure around the commodity. Nevertheless, oil is still set to post its first weekly gains in the previous three. 

Oil traders now shift their focus to Baker Hughes US Oil Rig Count report, due later during US trading session on Friday.

Technical levels to watch

From current levels, session low near $46.40 level might continue to provide immediate support, which if broken now seems to drag the pair below $46.00 round figure mark and open room for further downslide towards its next major support near $45.10 area.  

On the flip side, sustained move back above $47.00 mark, leading to a momentum above $47.30 resistance, would reaffirm continuation of the near-term bullish momentum initially towards $48.00 round figure mark and eventually towards August daily closing high resistance near $48.90-49.00 zone.