Oil continues to surge, heading back towards $49.00 level

Extending Friday's sharp rebound, WTI crude oil prices rose for second consecutive day to currently trade at session high level of $48.85 as waning fears of a Brexit is seen weighing on the US Dollar and boosting demand for dollar-denominated commodities.

As we head closer to the crucial UK-EU referendum on June 23, rising expectations of the UK remaining in the European Union continues to fuel risk-on rally across global financial markets and dent the safe-haven demand for the US currency.

Last week, the commodity dropped sharply on renewed worries over a global supply glut after the resumption of oil production in Canada. The black gold, however, shrugged-off oversupply worries and the latest increase in the number of active US rigs, and surged on Friday after the OPEC Secretary General, Mohammed Sanusi Barkindo, hinted towards calling for an emergency meeting of member countries to discuss production cut / freeze in order to restrict sharp decline in crude oil prices.

Moving forward, risk sentiment will continue to be driven by expectations of the outcome from the upcoming UK-EU referendum on Thursday, which remains the biggest near-term fundamental trigger and key overhang on the global financial markets.

Technical levels to watch

From current levels, momentum above $48.80-90 is likely to get extended towards $49.50 horizontal barrier, which if cleared seems to assist the commodity back above $50.00 psychological mark resistance. Meanwhile, reversal from current resistance area and a subsequent break below $48.00 round figure mark now seems to find support near $47.75-70 area. A decisive break below $47.75-70 support might negate any further bullish bias and increase the vulnerability back towards $46.30-25 support region.