Oil fell, hovering near three-month lows, as key market measures flashed signs of weakness. Still, futures have remained rangebound as traders await the next catalyst. 

Front-month futures of global benchmark Brent settled below $83 a barrel on Tuesday. Prices have traded in a narrow range of US$5 this month.

“The lack of major, multi-quarter themes leads us to believe that range-bound volatility is likely here to stay,” RBC Capital Markets LLC analysts including Helima Croft said in a note. 

Brent’s prompt spread narrowed to as low as 10 cents a barrel — the smallest premium for front-month contracts since January — signaling that supply is running ahead of demand. Additionally, the Brent DFL — a measure of Dated Brent relative to Brent futures — has turned negative, a sign of weakness in the physical oil market. 

Still, Brent futures are about 7 per cent higher this year, supported by OPEC+ cuts, although prices have eased since mid-April. Crude’s price volatility has fallen to the lowest in five years. 

Traders are now turning their attention to the producer group’s meeting in early June, where a rollover of existing curbs is expected. Meanwhile, geopolitical tensions continue, with ongoing drone strikes on Russian oil refineries and another Houthi attack against a tanker in the Red Sea area over the weekend.

Meanwhile in the US, the Biden administration announced on Tuesday that it’s selling 1 million barrels of gasoline stockpiles from reserves, which caused gasoline futures to extend declines to session lows at about $2.49 a gallon. 

While the sale is an attempt to lower gasoline prices during the summer driving season, analysts have said 1 million barrels is unlikely to make a significant difference in the East Coast region, which burned through more than 3 million barrels of gasoline a day last June.


  • WTI for June delivery, which expires on Tuesday, dropped 0.7 per cent to settle at $79.26 a barrel in New York.
  • The more active July contract dipped 0.8 per cent to $78.66 a barrel.
  • Brent for July settlement fell 1 per cent to $82.88 a barrel.