Global oil prices fall to a more than 1-week low, a day after settling near a 2-month high

By Myra P. Saefong and William Watts

Natural-gas futures end lower after Monday's 3.9% decline

Oil futures declined on Tuesday, with prices for the global benchmark ending at their lowest in more than week - after ending the previous session at a nearly two-month high, buoyed in part by geopolitical worries.

Price moves

West Texas Intermediate crude CL00 for August delivery CL.1 CLQ24 fell 80 cents, or 1%, to settle at $80.83 a barrel on the New York Mercantile Exchange. August Brent crude BRNQ24, the global benchmark, lost $1, or 1.2%, to end at $85.01 a barrel on ICE Futures Europe, the lowest front-month finish since June 17, according to Dow Jones Market Data. It ended Monday at the highest since April 30. More actively traded September Brent BRN00 BRNU24 fell 93 cents, or 1.1%, to $84.22 a barrel.July gasoline RBN24 tacked on 0.1% to $2.51 a gallon, while July heating oil HON24 fell 0.5% to $2.51 a gallon.Natural gas for July delivery settled at $2.76 per million British thermal units, down 1%.

Market drivers

A series of drone attacks last week on Russian oil infrastructure by Ukraine, combined with escalating tensions between Iran-backed Hezbollah and Israel have buoyed crude prices, Claudio Galimberti, director of global market analysis at Rystad Energy, said in a note.

"Against a backdrop of escalating geopolitical tensions, including conflicts in the Middle East and the ongoing war between Russia and Ukraine, Brent surpassing $85 per barrel could be the start of more upward pressure on prices," he said.

Meanwhile, signs of strong summer demand in the Northern Hemisphere after earlier jitters over a shaky start to the U.S. summer driving season, which runs from Memorial Day to Labor Day, have also encouraged bulls, analysts said.

Galimberti said expectations for a summer surge in fuel demand have been aided by strong growth in aviation. Jet fuel is expected to see an increase in demand of 550,000 barrels a day, according to Rystad, after a 1.2 million barrel-a-day jump last year.

"For the time being, this strength in aviation activity signals a positive trend for oil demand, particularly in the context of summer travel, economic recovery and consumer optimism," he wrote.

The Energy Information Administration will issue its weekly report on U.S. petroleum supplies Wednesday morning.

On average, analysts polled by S&P Global Commodity Insights expect the government agency to report supply declines of 200,000 barrels each for commercial crude and gasoline, and 900,000 barrels for gasoline, as of the week ended June 21.

The latest report covering the week ended June 14 revealed weekly declines in commercial crude oil, gasoline, and distillate fuel inventories. It also showed that total motor gasoline product supplied, a proxy for demand, over the last four weeks was down 1% from the same time a year ago, averaging 9.1 million barrels a day.

Petroleum inventories are likely to post declines across the board in the latest week, which should give oil prices "a little bit of a bounce," said Phil Flynn, senior market analyst at The Price Futures Group. "I would assume that the market is getting close to a bit of a bottom here and expect to see the supplies tighten as we get closer to the 4th of July holiday and that should keep the market on an upward trek."

-Myra P. Saefong -William Watts

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06-25-24 1530ET

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