US crude oil lost nearly $2 on Tuesday, falling for a second straight day as a rush of selling ahead of the session close brought the contract to its lowest price since January. US front-month September crude fell sharply a day ahead of its contract expiration, hitting a session low of $94.27, its lowest in seven months, before paring losses to close at $94.48 a barrel, down $1.93.
"There were physical sellers into the close, and not enough buyers. It was pure fundamentals on the trading," said Bill Baruch, senior market strategist at iitrader.com in Chicago. US October crude fell by 89 cents to settle at $92.86. Brent crude edged lower, notching a fresh 14-month low during Tuesday's session as the prospect of increased Iraqi and Libyan oil supplies weighed on the market.
Brent crude oil for delivery in October fell 4 cents to settle at $101.56 a barrel, after earlier falling to $101.07, the lowest level since June 2013, the same month Brent prices were last below $100 a barrel. Several analysts said Brent was testing support around $101, noting the proximity of Tuesday's low to Monday's low of $101.11. US RBOB gasoline futures rose by more than 1 percent, after a report by industry intelligence company Genscape of decreased activity in a crude unit at Irving Oil Ltd's 300,0000-barrel-per-day refinery in St. John, New Brunswick.
PBF Energy Inc also reported flaring at its Delaware City, Delaware, refinery due to an external power disturbance. Russia's Lukoil said on Tuesday it had shipped 1 million barrels of oil produced from southern Iraq's giant West Qurna-2 oilfield, its first shipment from the field, despite a surge of violence in Iraq. Libya also was due on Tuesday to start loading its first crude oil tanker in a year from Es Sider port, and Libya's National Oil Corp said the country's oil production had risen to 562,000 bpd, up from 535,000 bpd last weekend.
Delegates from the Organisation of the Petroleum Exporting Countries said the group is not worried about a slide in oil prices towards $100 a barrel, with current levels seen as acceptable for producers while higher seasonal demand in the coming weeks was expected to support the market. Threats to supply remain however, as Iraqi forces halted their offensive to recapture Tikrit because of resistance from Islamic state fighters.
"There is still political risk out there, and certainly the Brent contract is vulnerable to that much more so than the US crude contract," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania. US crude oil and refined product stockpiles were forecast to have fallen in the week to August 15, a preliminary Reuters survey of analysts showed.
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