Oil extends recovery gains to 8-day high at $42.50

WTI crude oil extended its recovery on Monday from a multi-month lows touched in the previous week and is currently trading at 8-day high near $42.50-55 region. 

Reports that several OPEC members might be pushing for a fresh deal on output freeze is extending support to oil prices. Recent downturn in oil prices will be the key discussion point when OPEC hold an informal talks at an energy conference in September. 

Renewed worries of a global supply glut has been the key factor driving oil prices lower in the recent past, dragging the commodity back below $40.00/barrel mark for the first time since April 19, with the latest data, released on Friday, showed the number of US oil rigs rose for a sixth straight week.

However, reviving hopes of setting new limits on oil production by world's major oil-producing nations provided a much needed respite in the oil market. The ongoing recovery has happened despite of a broadly stronger US Dollar, which usually weighs on dollar-denominated commodities - like oil. 

Technical levels to watch

From current levels, $42.95-43.00 region seems to act as immediate resistance, above which the recovery trend could further get extended towards an important support break-point, now turned strong resistance, near $44.30-40 region.

On the flip side, $42.00-41.85 region now seems to act as immediate support, which if broken seems to drag the commodity back towards the very important 200-day SMA support near $40.30 region.