WTI fails to rise above $74, looks to settle in the red

The barrel of West Texas Intermediate touched its highest level since November 2014 above $75 on Tuesday but made a deep correction to end the day flat near the $74 mark. After the weekly API data showed a bigger-than-expected draw in crude oil inventories in the U.S., the barrel of WTI started the day on a positive note and edged higher toward $75 mark before losing its traction.

Nonetheless, today's price action suggests a technical reaction to the latest rally rather than a drop driven by a fundamental development. Supply disruptions in Libya, Canada, and Venezuela and the Trump administration's pressure on international firms to stop importing oil from Iran are likely to continue to create upside pressure in crude oil prices. 

Earlier today, Iran’s OPEC governor, Hossein Kazempour Ardebili, argued that U.S. President Trump's stance on oil bans would end up hurting the economy and consumer would pay the price.

"Trump’s demand that Iranian oil should not be bought, and (his) pressures on European firms at a time when Nigeria and Libya are in crisis, when Venezuela's oil exports have fallen due to U.S. sanctions, when Saudi’s domestic consumption has increased in summer, is nothing but a self harm," Ardebili said, as reported by Reuters.

The weekly stock report of the EIA, which is usually published on every Wednesday, will be released tomorrow due to the Independence Day holiday. 

Technical levels

 The initial resistance for the WTI aligns at $74.75 (daily high) ahead of $75.25 (Jul. 3 high) and $76 (psychological level). On the downside, supports could be seen at $73.50 (daily low), $73 (psychological level) and $72.50 (Jul. 2 low).