Oil prices dived overnight after reports surfaced saying the United States is mulling a massive Strategic Petroleum Reserve release. It is said that release may amount to as much as 180 million barrels of oil over the next few months. No decision has been made yet but it may be made soon as the International Energy Agency called a ministerial meeting for Friday to discuss collective oil release. Meanwhile, OPEC+ is expected to announce its decision on output this afternoon. Oil producers do not see a need to increase output beyond previously agreed 400k bpd. A massive reserve release by the US and its allies may have some impact on OPEC+ oil market outlook. However, as decision on this release will not be made until after OPEC+ meeting, it is unlikely that it will have any impact on OPEC+ policy statement today.
Taking a look at the Brent chart (OIL) at the H1 interval, we can see that an important technical pattern may be building up. Price took a steep dive during the Asian session but declines were halted at the support zone marked with 61.8% retracement of the upward move launched in mid-March. As a result a potential inverse head and shoulders pattern may be building up with shoulderline at the aforementioned 61.8% retracement ($105.70) and neckline at 38.2% retracement ($111.00). Textbook range of a breakout from this pattern suggests a possibility of an upward move to $119.00 - recent local highs. However, a break above the neckline would be needed in order to confirm bullish setup.
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Source: xStation5
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