U.S. crude oil futures pulled back Tuesday after hitting a three-month high last week as the conflict in the Middle East raged on.
The West Texas Intermediate contract for March fell $1.01, or 1.28%, to settle at $78.18 a barrel. The Brent contract for April dropped $1.16, or 1.39%, to $82.40 a barrel. There was no WTI settlement on Monday due to the President’s Day holiday.
U.S. crude gained 3% last week to settle Friday at its highest price, $79.19 a barrel, since Nov. 6. The global benchmark rose 1.5% for the week to settle at its highest price since Jan. 26.
Robert Thummel, senior portfolio manager with Tortoise Capital, said prices likely pulled back Tuesday due in part to traders taking profits after WTI booked a solid run so far this month.
Tamas Varga, an analyst with oil broker PVM, said crude prices were also being pulled lower as heating oil and gasoil contracts come under pressure from plummeting natural gas prices.
Crude futures gained last week on the conflict in the Middle East after Israel launched strikes in Lebanon and vowed to press on with its offensive in Gaza to the southern city of Rafah. The market largely shook off stubborn inflation in the U.S. and a bearish demand forecast from the International Energy Agency.
Houthi militants on Monday attacked another cargo ship in the Bab el-Mandeb strait, forcing the crew to abandon the vessel. The Iran-allied militants claimed they caused “catastrophic damage” to the ship.
The attack highlights the ongoing threats to commercial vessels in the Red Sea, which has forced shipping giants such as Maersk to divert cargo around the Cape of Good Hope in Africa.
“If anything, Houthis attacks on cargo ships are intensifying in the Red Sea and around the Gulf of Aden,” Varga wrote in a note to clients Tuesday.
