The oil complex settled lower Tuesday as weak fundamentals continued to trump persistent geopolitical risk.
NYMEX September crude settled 91 cents lower at $97.38/barrel, while ICE September Brent closed down 80 cents at $104.61/b.
Products fell as well, led by NYMEX September ULSD, which settled 2.43 cents lower at $2.8469/gal.
A weakened September RBOB finished 94 points down at $2.7155/gal, the lowest settle for an RBOB contract since February 6, when the March contract closed at $2.6830/gal.
"The market is trying to stop this $10/b slide we've seen over the past month [in NYMEX crude futures]," Tradition Energy analyst Gene McGillian said.
"Regardless of the geopolitical climate, we're still just not seeing any supply disruption. Weak underlying fundamentals seems to be the focus."
Tensions in Iraq continued to heat up Tuesday, a day after Islamic State forces took over the city of Sinjar and two oil fields, both in the north of the country.
AFP reported earlier that Kurdistan Workers' Party (PKK) military head Murat Karayilan called upon all Kurdish armed groups to unite against IS forces. The PKK head called for a joint effort in forming a "national resistance front," AFP said.
Despite the likelihood of more fighting, global oil supply remains steady as the US refining market nears seasonal maintenance.
"I keep reading the stories coming out of Iraq," McGillian said. "I'm amazed at what's been happening, but the fact is that there is a lot of oil in the Atlantic basin. We're basically right around the corner from maintenance season and we're going to see a lot of [downward] pressure on WTI."
Citi Futures Perspectives energy analyst Tim Evans said weakness in the US gasoline market was weighing on broader market sentiment.
"We continue to see material risk to supply from Libya, Iraq, and Russia, but the market over the past six weeks has become increasingly complacent...with Commitments of Traders data showing a substantial flow of selling, at least in the data through July 29," Evans said of RBOB futures.
The latest Commodity Futures Trading Commission data for the reporting week ended July 29 shows money managers have more than halved their net long position in RBOB futures since late-June/early-July. Total holdings in RBOB futures for the group, long or short, have fallen more than 23% over the last four reporting weeks.
