By Nicole Friedman
NEW YORK--U.S. oil futures declined Tuesday as concerns about
falling gasoline demand weighed on prices, while ongoing
geopolitical tension kept the global benchmark trading near
flat.
Light, sweet crude for September delivery fell $1.07, or 1.1%,
to $100.60 a barrel on the New York Mercantile Exchange. Brent
crude on ICE Futures Europe recently traded down 10 cents, or 0.1%,
at $107.47 a barrel.
U.S. prices slid Tuesday on concerns that demand for petroleum
products, particularly gasoline and other fuels, will fall as
Americans take fewer vacations once the summer ends. The busy
summer-driving season, when gasoline demand is typically strongest,
ends on Labor Day.
Oil supplies have fallen in recent weeks as refineries have run
at unusually high utilization rates. But gasoline supplies have
increased in the past three weeks.
The U.S. Energy Information Administration is due to report its
storage data for the week ended July 25 on Wednesday at 10:30 a.m.
ET. While analysts and traders are still finalizing their
forecasts, many expect the agency to report that gasoline
stockpiles grew for another week.
"It's pretty clear that if we keep our utilization rates pretty
high, we do drop our crude stocks down, but you just see them go
into the storage tanks for products," said Gene McGillian, broker
and analyst at Tradition Energy in Stamford, Conn.
Meanwhile, global benchmark Brent is trading near flat.
Globally, oil is well supplied and demand from refiners in Europe
and Asia is weak. But ongoing violence in hotspots around the world
is keeping traders concerned that a supply outage could quickly
shrink global inventories.
The closely watched price gap between the U.S. benchmark
contract and Brent recently traded at $6.87 a barrel, the highest
level since early July.
President Barack Obama and European Union leaders agreed Monday
to adopt new sanctions against critical sectors of Russia's
economy. Russia is the second-largest oil exporter, and worries
that those exports could fall have buoyed Brent prices in recent
months.
However, "the impact on energy should be minimal in the short
term," said Citigroup in a note, referring to the latest sanctions.
Restrictions in technology exports to Russia could limit the
country's longer-term production capacity, the bank said.
"The costs to Moscow come in the form of the threats that
sanctions imply for long-term oil and gas production in Russia,
upon which the government depends for revenues," according to
Citigroup.
Front-month August reformulated gasoline blendstock, or RBOB,
recently rose 2.31 cents, or 0.8%, to $2.8723 a gallon. August
diesel rose 1.93 cents, or 0.7%, to $2.9072 a gallon.
Write to Nicole Friedman at nicole.friedman@wsj.com
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