HOUSTON – Oil prices fell about 1% on Monday as Middle East tensions eased and investors turned their focus to lackluster seasonal demand following a bearish U.S. report last week showing a large gasoline stockbuild.

Oil falls 1% as Mideast tensions ease, U.S. gasoline stocks weigh- oil and gas 360

Source: Reuters

Brent crude LCOc1 was down 64 cents at $64.34 per barrel at 9:59 a.m. CST (1559 GMT), while West Texas Intermediate (WTI) crude CLc1 was down 73 cents at $58.31 a barrel.

Thin U.S. refinery margins for petroleum products have sapped crude prices, particularly as winter demand for heating oil has disappointed suppliers and gasoline margins have weakened, analysts said.

“It’s hard for crude oil to go higher if refiners continue to lose money or at best break even on gasoline,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service (OPIS).

U.S. gasoline stocks rose by the most in one week in four years, surging by 9.1 million barrels in the week to Jan. 3, the U.S. Energy Information Administration reported last week.. Total motor gasoline inventories were about 5% above the five-year average for this time of year, it said.

Oil prices surged to their highest in almost four months after a U.S. drone strike killed an Iranian commander on Jan. 3 and Iran retaliated with missiles launched against U.S. bases in Iraq. But they have slumped again as Washington and Tehran retreated from the brink of direct conflict last week.

Global benchmark Brent touched $71.75 per barrel last week before ending on Friday below $65.

With tensions between the United States and Iran cooling, investors have had time to focus on fundamental demand issues, said John Kilduff, partner at Again Capital LLC in New York.

“The market continues to get a sense of relative oversupply, and this winter has been a bust in the Northern Hemisphere. There’s been an abject lack of heating oil demand,” Kilduff said.

A U.S.-China trade deal is due to be signed in Washington on Wednesday. The Trump administration has invited at least 200 people to a ceremony for the signing, but the two nations have not yet finalised details of what will be signed, White House officials said on Friday.

“While this week should see the signing of a Phase 1 trade deal between the U.S. and China, we suspect that agreement is already largely discounted in the price level, and is unlikely to provide a strong boost to oil prices,” global oil strategist at BNP Paribas in London Harry Tchilinguirian told the Reuters Global Oil Forum.

Legal Notice