NEW YORK--U.S. oil futures slid below $95 a barrel for the first time since January as high global supplies continued to weigh on the market and traders closed positions ahead of the front-month contract's expiration.
Light, sweet crude for September delivery tumbled $1.93, or 2%, to $94.48 a barrel on the New York Mercantile Exchange, the lowest settlement price since Jan. 17. The more actively traded October contract fell 89 cents, or 1%, to $92.86 a barrel.
Brent crude, the global benchmark, fell 4 cents to $101.56 on ICE Futures Europe, a fresh 14-month low.
The price gap between the September and October Nymex contracts, also called the "spread," narrowed to $1.62 a barrel after settling Monday at $2.66 a barrel, the largest price difference between the front-month and second-month contract since 2008. The September contract expires at settlement Wednesday.
"You have funds exiting today out of speculative positions" ahead of Wednesday's expiration, which is pressuring prices, said Carl Larry, analyst at Oil Outlooks & Opinions.
The significantly higher price for September oil reflects traders' concerns about supplies at Cushing, Okla., the pricing point for the Nymex contract. Cushing supplies have fallen in recent months, even as global supplies have been ample.
"Demand for crude in the midcontinent should be fairly robust" in September, as refiners begin seasonal maintenance, said Andy Lebow, senior vice president for energy at Jefferies Bache LLC. "That's being reflected in the spread."
U.S. oil prices have slumped 12% since hitting nine-month highs in mid-June, as investors perceived lower risk to oil supplies in Iraq, Russia and elsewhere, and focused instead on high supplies.
The U.S. Energy Information Administration is set to release its storage data for the week ended Aug. 15 on Wednesday.
Analysts expect the EIA to report that crude-oil supplies fell by 900,000 barrels last week, according to a Wall Street Journal survey.
They also expect gasoline supplies to fall by 1.3 million barrels and stocks of distillates, including diesel and heating oil, to decline by 700,000 barrels.
U.S. gasoline and distillate supplies, including diesel fuel and heating oil, have fallen in recent weeks, even as refineries have run at unusually high rates to produce more. The busy summer-driving season lasts through the end of August.
"I think demand is going to be a little bit stronger this week" with the Labor Day holiday ahead, Mr. Larry said.
Front-month September reformulated gasoline blendstock, or RBOB, rose 3.94 cents, or 1.5%, to $2.6954 a gallon. September diesel gained 1.11 cents, or 0.4%, to settle at $2.8171 a gallon.
The American Petroleum Institute, an industry group, is scheduled to release its inventory data for the same period later Tuesday.