Oil prices looking for support as WTI tests back below $68

• Oil costs are on the slide once again as constraints and supply buildups prove to be short-lived.
• Further production cap increases from OPEC remain a possibility moving forward as prices continue to stabilize.

Oil prices are falling back into recent support with WTI drifting back into the 68.00 per barrel region.

Crude oil costs experienced their worst monthly decline in over two years in July as a multi-year high in barrel prices broke away amidst plans by OPEC and Russia to boost production limits.

Oil markets have been halting further declines recently after the energy commodity fell too far, too fast on pumped-up production from OPEC, and supply constraints both within the US abroad have seen oil markets quick to buy, implying that bullish oil traders, while sidelined on rising production, are remaining close at hand.

Saudi Arabia had to pull oil shipments from the Bab El-Mandeb Strait recently after two cargo ships were attacked by Yemeni Houthis, but the Houthis have promised to refrain from attacking civilian ships in the region in order to 'promote regional peace', and the fast turnaround on a Saudi supply constraint has met headfirst with rising supply counts in the US. The American Petroleum Institute (API) recently noted that crude oil barrel counts in the US are back on the rise, expanding last week by over 5 million barrels, erasing several weeks of expectations for steady declines in reserve supplies.

WTI levels to watch

With WTI crude barrels falling back beneath 68.00, buyers will be looking to halt any further declines into the last swing low at the 67.00 level in hopes of propping prices back over last week's high of 70.40 with eyes on the year's current highs of 75.35, while bears will be looking to drive the action further down into mid-June's lows at 63.50.