Oil traders are turned to Europe today as the European Union debates over the shape of the looming embargo on Russian oil. This is a major medium- and long-term factor for oil prices and is pushing crude prices higher today. Amid such high level talks it is easy to miss another factor for oil prices with more short-term implications on prices – weekly report from US Department of Energy on the level of oil and oil derivative inventories. Report completely missed estimates from API released yesterday in the evening.
- Oil inventories: +1.30 mb vs -1.2 mb expected (API: -3.48 mb)
- Gasoline inventories: -2.23 mb vs -0.2 mb (API: -4.50 mb)
- Distillate inventories: -2.34 mb vs -1.1 mb (API: -4.46 mb)
A build in headline crude inventories put some pressure on oil prices with WTI pulling back below $106 area. Taking a look at WTI chart at H4 interval (OIL.WTI), we can see that price made a failed attempt of breaking above resistance zone marked with 38.2% retracement earlier today ($106.75). A long, upper wick of previous H4 candlestick painted in the resistance zone suggests that some kind of a reversal may be looming. If pullback deepens, a near-term support to watch can be found in the $103.50 area, where the short-term upward trendline and 200-period moving average are located.