WASHINGTON – Oil prices fell well below $69 Tuesday as supply concerns eased with the end of the U.S. summer driving season and U.S. traders caught up after Monday's Labor Day holiday.
U.S. light crude for October delivery settled at $68.60 a barrel, down 59 cents from Friday's settlement price. London Brent crude, which traded Monday, lost 38 cents to settle at $68.09 a barrel.
Click here to visit FOXBusiness.com's Energy Center.
"One of the most important reasons why oil prices have come down so much is because product support is so weak," said Eoin O'Callaghan of BNP Paribas. "Gasoline prices have sold off, showing strong supply fundamentals in that market."
U.S. gasoline supplies have been more than ample to meet demand this summer driving season, which traditionally ends after Labor Day. Gasoline stocks in the world's top petroleum consumer at the end of August were 4.6 percent more than last year, the federal Energy Information Administration said last week.
U.S. crude has slumped 11 percent in about a month and now stands more than $10 below its record high from mid-July.
A weaker-than-expected hurricane season and easing geopolitical tensions have also pressured prices.
"A seasonal peak in U.S. demand has passed and inventories remain comfortable," said Tobin Gorey of the Commonwealth Bank of Australia. "We think oil prices are more of a two-way street than they have been for some time: the 'buy first, ask questions later' mentality is dissolving."
But some analysts saw prices bottoming out soon due to the uncertainty surrounding Iran's dispute with the West.
"The market has not seen clear signs about the Iranian issues. Crude should trade in a range of around $67-$68 as long as the Iran disputes drag on," said Tony Nunan, the manager at the Mitsubishi Corp.'s risk management unit.
U.N. Secretary-General Kofi Annan Monday called for a peaceful end to the OPEC producer's nuclear dispute, although he said Tehran had insisted it would not halt uranium enrichment before any talks.
Iran had already failed to meet an Aug. 31 deadline to halt its enrichment program or run the risk of U.N. sanctions, but the European Union has engaged in a last round of negotiations to avert punitive action favored by the United States.
Hitting Iran now with sanctions over its nuclear work could drive it "away from the civilised world," said Igor Shuvalov, a senior aide to Russian President Vladimir Putin. China said Tuesday it still wanted major world powers to negotiate with Iran even after it defied the U.N. Security Council deadline.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox