Oil fell below $139 this afternoon dropping by more than $6 this week, due to easing concerns over an Atlantic hurricane and the falling price of refined products.
US light crude fell $2.69 to as low as $138.68 a barrel, the lowest since June 26th. It was trading $2.22 lower at $139.15 by 12.37pm.
London Brent crude was trading $2.27 down at $139.60. Oil prices fell $4 yesterday on signals that Iran would be more flexible in negotiations over its nuclear programme.
Oil has fallen from a record high of $145.85 hit last week. Hurricane Bertha became a "major" hurricane on Monday, but none of the computer models used to predict storm tracks indicated it would steer toward the Gulf, the home of US oil and gas industry.
With the onset of the Atlantic hurricane season this year, oil traders will be watching for any signs of a storm that could disrupt Gulf oil production and refining operations. "Iran issues still remain supportive but it seems the tone is easing for now and the hurricane is gone," a broker said.
Analysts said the market focus would shift later this week to U.S. weekly oil statistics and a monthly report from the International Energy Agency (IEA), which would give a fresh look at the demand-supply situation amid a slowing world economy.
"We have US weekly stats tomorrow and the IEA report comes up a day after," said Mike Wittner, the head of oil research with Societe Generale.
"Also in a short term, negative impact may be refining margins. Margins are weaker now and that means oil refiners are not rushing to buy crude oil."
The weekly US oil inventory data, which will include gasoline demand during the long weekend for the July 4th Independence Day holiday, will be released tomorrow.