Oil attempts a tepid recovery to $42.00 region

Extending its near-term bearish trajectory, WTI crude oil dropped to a fresh three-month low during European session on Thursday before finding some support at lower level that helped the commodity to move back towards $42.00/barrel mark.

Renewed worries of a global supply glut have been the key factor weighing on investor sentiment and driving the black gold lower in the past two months. Hence, the commodity extended its negative reaction to a surprise rise in US crude oil inventories, as reported by EIA on Wednesday. 

Adding to this cautious market sentiment also drove investors away from riskier assets - like equities and commodities, including oil.

Investors now turn their focus to Friday's key BOJ monetary policy decision and the US GDP release, which would drive investor sentiment and eventually impact oil prices.

Trade the US Gross Domestic Product - July 29 GDP Live Coverage

Technical levels to watch

Renewed weakness below three-month low support near $41.70-65 area would increase the commodity's vulnerability to continue drifting towards testing the very important 200-day SMA support near $40.10-$40.00 round figure mark.

On the flip side, the commodity needs to clear $42.60-65 immediate strong resistance in order to increase the prospects of additional recovery towards its next major resistance near $44.10-20 region.