Oil price falls around 6% as supply fears ease

WTI oil fell around 6% on Wednesday, as tensions over the war in Ukraine eased, bringing a dash of optimism that sparked fresh risk appetite.
In addition, fears of significant global supply shortage after the US banned Russian oil imports and the UK announced it will follow, eased and analysts said that the US could offset the outages from Russia by its own production that further cooled the situation.
Oil spiked over $130 per barrel, hitting the highest since July 2008, on signals that exports of Russian energy products could be added to the list of sanctions imposed by the Western allies.
Release of 60 million barrels from oil strategic reserves by the International Energy Agency also helped in calming oil prices, along with signals that interrupted nuclear talks with Iran, which were nearly finalized, could resume that would allow Iran to continues their oil exports and further stabilize oil market.
Despite quite significant drop today, the price action stays above last Friday’s closing level at $114.99 and as long as Monday’s gap remains unfilled, near-term bias will remain with bulls.
Technical studies on daily chart remain in bullish configuration, although indicators turned south and reversing from overextended levels that indicates prolonged consolidation and possible deeper pullback, which mainly depends on geopolitical situation.
Fresh bears look for initial signal on eventual daily close below $120 level after repeated failure on Mon/Tue, with filling the gap, to further softens near-term structure and risk drop to 114.04 (Fibo 38.2% of $87.44/$130.48) and 110.00 (psychological).
US weekly crude inventories showed lower drop in crude stocks, compared to the previous week’s figure that added to positive signal.

Res: 120.00; 126.79; 129.41; 130.48
Sup: 115.49; 114.04; 112.46; 110.00