Oil backing off, WTI below $68 as production ramps up

• Crude falling back again as supply picks up, Middle East tensions wash out.
• API figures showed yet another buildup in US reserves, adding an excess million barrels in a week.

WTI crude oil prices are walking back from three-year highs, testing back into 67.60 as US production continues to outpace demand.

API Weekly Crude Stocks figures on Tuesday disappointed traders, showing another million-plus barrel buildup in crude supplies in the US, shattering hopes that OPEC-led cuts have been having an effect and that demand is rising fast enough to keep up with the current supply glut pouring out of the United States.

Crude oil recently rallied to multi-year highs, but many traders are worried that rally was fueled mostly by recent Middle East tensions as the Syria civil war begins to drag outside observers into the political fray. Market fears over an altercation between the US and Russia over a strategic bombing of Syria in retaliation for the Syrian President Bashar al-Assad using what is believed to be chemical weapons against his own populace.

With Syria fading into the background once more, crude supply outstripping demand continues to weigh down the fossil fuel, and traders are still hoping for a drying up of US activity, even as the US is on pace to become the world's single largest provider of crude within the next year or two. Further adding to the downside pressure is the likelihood of a US-France deal on Iran, which further saps strain out of the Middle East theater. On Tuesday it was reported that that the US and France are willing to reach an agreement to keep the Iranian deal on the table. The Iranian deal is an agreement which was reached in 2015 between Iran and six other countries that put limits on Iran's nuclear program in exchange for sanctions relief.

WTI Levels to watch

WTI Crude has been digging around the current price levels for a week now, and as FXStreet's own Flavio Tosti noted, "support is seen at 67.30 demand level and 65.42 swing low. Resistance is seen at 68.50 supply level and at 69.56 high of the year."