Oil prices drift lower but remain stuck in narrow range as market struggles to find catalysts

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A Shell gas station on May 03, 2024 in Austin, Texas. 
Brandon Bell | Getty Images

Crude oil futures fell more than 1% on Tuesday in the absence of major market catalysts to support prices.

U.S. crude oil and global benchmark Brent have traded in a $3 range this month since selling off from April highs after traders rolled back geopolitical risk premium as fears of a wider Middle East war eased.

“I just don’t think there’s a lot of conviction right now in the market,” Helima Croft, head of commodity strategy at RBC Capital Markets, told CNBC’s “Squawk Box” Tuesday. “We’ve basically lost all the geopolitical risk premium that have been driving prices higher.”

Here are today’s energy prices:

  • West Texas Intermediate June contract: $78.31 a barrel, down $1.49, or 1.87%. Year to date, U.S. crude oil is up 9.3%.
  • Brent July contract: $82.22, down $1.49, or 1.78%. Year to date, the global benchmark is up 6.76%.
  • RBOB gasoline June contract: $2.49 per gallon, down 1.8%. Year to date, gasoline futures are up 18.69%.
  • Natural gas June contract: $2.68 per thousand cubic feet, down 2.33%. Year to date, gas is up 6.88%.

Investors are now focusing more on fundamentals but the lack of near-term catalysts will likely keep prices rangebound for the time being, Croft told clients in a Tuesday note. RBC forecasts U.S. oil will average $79.50 a barrel and Brent $84 a barrel for the rest of the year

“We are not in a supply deficit situation,” Croft said. “We’re not having the anxiety that we sometimes get going into summer. But that said, we still have summer driving season ahead of us.”

Production cuts by a coalition of OPEC+ members have provided a floor for oil prices after last month’s selloff. The cartel will meet next weekend to review its production policy.

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WTI vs. Brent

John Evans, analyst at oil broker PVM, said the market will increasingly focus on how OPEC+ may react to the current oil price action as the meeting draws closer. The current softness in the market likely does not support bringing OPEC supply back on the market, Evans said.

Croft agrees: “I don’t think anyone is anticipating at this current price level that they’re going to be putting barrels back onto the market,” she told CNBC.

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