Oil Slips as Ukraine, Libya Keep Market in Check

By Christian BerthelsenDow Jones Newswires

Crude-oil prices ended lower in muted trading Tuesday as ongoing strife in Ukraine and Libya weighed on the market.

The benchmark U.S. crude contract for July delivery fell 24 cents, or 0.2%, to $104.11 a barrel on the New York Mercantile Exchange. The global Brent contract fell 30 cents, or 0.3%, to $110.02 a barrel on the ICE Futures Europe exchange.

Continue Reading Below

Gasoline futures pulled back from near one-month highs following the start to the U.S. summer driving season over the long Memorial Day holiday weekend, with the June contract falling 2.83 cents, or 0.9%, to $2.9952 a gallon on the Nymex.

The June contract expires later this week and much of the volume in the market has already shifted into July futures. In a note to clients, research consultancy Ritterbusch and Associates said speculators may be looking to scale back bullish bets on gasoline futures now that driving season is here.

With the long U.S. holiday weekend delaying weekly oil inventory reports until later in the week, analysts said there was little in the way of supply-and-demand fundamentals to drive trading. Rather, violence in Ukraine following national elections and a continued lack of crude production and exports from Libya weighed on the market, they said.

"There's no main story driving oil prices at the moment," said Gareth Lewis-Davies, oil strategist at BNP Paribas in London. He said the lack of more dire events in Ukraine kept oil prices from running higher. Traders have focused on the possibility, considered remote, that more aggressive Russian action in the region could lead to sanctions that would curtail global oil supplies from Russia, the world's second-largest oil exporter behind Saudi Arabia.

Despite a landslide win in Sunday's national election by pro-Europe candidate Petro Poroshenko, fighting between government forces and pro-Russia separatists continued Monday and Tuesday with the government beating back separatists who seized control of the Donetsk airport and dozens were reported killed.

Meanwhile in Libya, two major oil fields remained shut despite government proclamations weeks ago that disputes with protesters were resolved and operations would resume. There also were reports that occupiers of key oil ports refuse to recognize the newly organized central government. The disputes have dragged Libyan oil production down to 160,000 barrels a day, far below capacity.

Diesel for June delivery fell 1.5 cents to $2.9399 a gallon on the Nymex.