Oil inter-markets: should extend the slide if USD regains some strength

After last week's up-move beyond $46.00 handle, WTI crude oil retraced on Monday and dropped back to $45.00 handle on worries over global supply glut. 

Last week on Friday, WTI crude oil spiked above $46.00 handle as better-than-expected Chinese GDP and US economic data bolstered the outlook for energy demand. The last leg of Friday's up-surge was triggered by worries of supply disruption from the attempted coup in Turkey that also provided a boost to safe-haven appeal of the US Dollar. 

However, as coup jitters subsided on Monday, Friday's report from industry group Baker Hughes that showed continuous rise in US rig counts has resurfaced concerns of a global over-supply and is weighing on oil prices. However, lack of follow through strength in the US Dollar has limited the downslide for dollar-denominated commodities - like oil, suggesting that the fallout could be capped for now.

Crude remains highly correlated to investors risk sentiment towards riskier assets - like equities. A minor downtick in the broader US equity index (S&P 500) is further fueling the selling pressure around oil. Meanwhile, continuous slide in the Volatility Index (VIX) and recovery in US long-term (30-years) treasury yields are pointing otherwise and is seen supportive of the prevalent global risk-on trade. 

Summing it all, a fresh bout of buying interest around the greenback is likely to extend the near-term corrective move in crude oil prices, possibly towards 100-day SMA support near $44.00 round figure mark.