Oil prices are recovering in overnight trading after starting the trading week dominated by selling. The oil complex has been under pressure since the whole complex technically breached their respective support levels and entered into a short term downtrend. RBOB gasoline is the only commodity in the complex that has not declined as much as the rest of the other commodities indicating that there is still some underlying support as the refinery sector approaches the main part of the refinery maintenance season.The gains in the complex overnight are mostly driven by Brent as the Brent pipeline system remains closed for the third day in a row after a leak was discovered on March 2 on the Cormorant Alpha platform according to the operator of the platform. At the moment the reaction to the pipeline problem in the North Sea is not resulting in a major strengthening of oil prices rather the reaction has been relatively muted with prices for both Brent and WTI actually declining yesterday.I view the gains so far this morning as more short covering off of the pipeline news rather than any surge of new buying interest coming into the market. The spot Brent contract is also finding some light support as the technical support level of around $109.50/bbl has now held for the third trading session in a row. In addition the spot WTI contract breached and failed to stay below the psychological support level of $90/bbl ($88 to $89/bbl is a firmer technical support area) slightly improving the current negative market sentiment . At the moment I cannot say with any degree of confidence that today's moves are definitely a directional change in the underlying trend. For now I still view the price move in the oil complex as a short covering rally in a downward trend. Certainly if the situation in the North Sea remains an issue for an extended period of time higher prices would follow.The situation in the North Sea has also had a modest impact on the April Brent/WTI spread causing the spread to move back into the trading range that has been in play since early February. The spread breached the lower support level of about $19.70 last week but has now moved back into the range. The longer the pipeline issue persists in the North Sea the higher the likelihood that the spread will work its way toward another test of the upper end of the trading range of around $21.65/bbl. Some of the spread gains could be tempered depending on this week's Cushing and PADD 2 storage numbers.The economic data out of Europe this morning is biased to the positive side pushing equity markets to over four year highs. The EU services PMI declined less than estimated but it did come in lower than January's number. In addition EU retail sales actually increased in January by 1.2% percent versus December's 0.8 percent decline. A sign that the consumer is starting to spend again. In the UK the services PMI actually increased in February to 51.8 versus the consensus estimate of 51.In China the government kept it growth target unchanged at 7.5 percent for 2013 as the new government will follow the current policy of moderate growth rather than looking for the double digit growth rates seen earlier in the decade. The government also cut its inflation target from 4 percent to 3.5 percent suggesting the government has less tolerance for inflation led price surges. The new leader takes charge at the end of the country's annual parliament meeting which began today. I view the targets as having been set with a view that the likelihood of achieving them is very high and thus helping the new leader to start his tenure on a positive note.Global equity markets were mostly higher over the last twenty four hours as shown in the EMI Global Equity Index table below. However, the Index is still lower by 0.4 percent for the week resulting in the year to date loss widening to 0.5 percent. Brazil remains the main laggard in the Index with Hong Kong's bourse now also moving into negative territory for the year. As has been the case all year Japan's bourse remains at the top of the list showing a double digit year to data gain of 12.4 percent.This week's round of oil inventory reports will follows its normal schedule with the API data being released on Tuesday afternoon followed by the EIA report hitting the media airwaves at 10:30 am on Wednesday. My projections for this week's inventory report are summarized in the following table. I am expecting the US refining sector to decrease as more refineries move into maintenance mode. I am expecting a modest build in crude oil inventories, a modest decline in distillate fuel... as the weather was winter like over the east coast... and a draw in gasoline stocks during the report period as refinery runs continue to decline ahead of US maintenance season. I am expecting crude oil stocks to increase by about 0.9 million barrels. If the actual numbers are in sync with my projections the year over year comparison for crude oil will now show a surplus of 32.7 million barrels while the overhang versus the five year average for the same week will come in around 38.3 million barrels.I am expecting a draw in crude oil stocks in Cushing, Ok and in PADD 2 even as the Seaway pipeline has been has been running at constrained levels for most of the report period. This will be bullish for the Brent/WTI spread. However, as discussed above the shutdown of the Brent pipeline will likely offset any decline in Cushing stocks (unless of course if the decline is significant). Currently the spread is still trading well above the level it was trading at just prior to the Seaway pipeline announcement.With refinery runs expected to decrease by 0.2% I am expecting a draw in gasoline stocks. Gasoline stocks are expected to decrease by 0.8 million barrels which would result in the gasoline year over year deficit coming in around 1.8 million barrels while the surplus versus the five year average for the same week will narrow to around 0.5 million barrels.Distillate fuel is projected to decrease by 1.0 million barrels. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year will likely now be about 16.3 million barrels below last year while the deficit versus the five year average will come in around 17.2 million barrels.The following table compares my projections for this week's report (for the categories I am making projections with the change in inventories for the same period last year. As you can see from the table last year's inventories are mostly in directional sync with this week's projections. As such if the actual data is in line with the projections there will be only small changes in the year over year inventory comparisons for just about everything in the complex.I am keeping my view of the entire complex at cautiously bearish. That said I am continuing to fly the caution flag as any additional equity market corrections will impact oil prices in much the same way... another round of profit taking selling as we experienced yesterday.I am maintaining my Nat Gas view and bias at neutral as the weather forecasts and nearby temperatures are supportive. As I have been discussing for weeks the direction of Nat Gas prices are primarily dependent on the actual and forecasted weather pattern now that we are still in the heart of the winter heating season and currently those forecasts have turned a tad more bullish at the moment.Markets are mixed higher of the US trading session as shown in the following table.Best regards,Dominick A. Chirichelladchirichella@mailaec.comFollow my intraday comments on Twitter @dacenergy.