Oil prices are continuing today to pull back from their recent highs. Crude has fallen 19 cents, down to $85.08, and were briefly trading down as low as $84.68 earlier in the session.

Last week prices shot up on fear that escalating tensions between Turkey and the Kurds of Northern Iraq could lead to supply disruptions in the area. But those fears have been overlooked during the past couple of sessions as traders are now paying closer attention to American inventory levels.

When the U.S. Energy Department releases its weekly inventory report later this morning, analysts polled by the Dow Jones Newswires are expecting to see crude inventories jump by around 300,000 barrels. If there is indeed a jump in inventories, you can be sure prices will continue to come under selling pressure, but not everyone agrees we will see inventory levels increase. Some industry experts are taking the opposite position and predicting a 2 million barrel decrease last week.

For now, the bears are winning, but we will get a much better picture of the current situation once the actual numbers come out later this morning. I will post the results here as well as the markets reaction.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer