NEW YORK: Crude oil prices declined on Tuesday for the first time in a week, following de-escalating tensions in the Middle East.

The absence of a retaliatory attack after Israel's actions against senior Palestinian and Lebanese leaders contributed to the market's pullback, reported Sputnik.

This marked the end of a five-session rally that had driven US West Texas Intermediate (WTI) and UK Brent prices up by nearly 10 per cent, with both benchmarks slipping around 2 per cent on Tuesday.

Analysts cautioned of further corrections, especially if weekly inventory data due on Wednesday showed a fading in the hot consumption streak seen in US crude since June. As a sign of trepidation, WTI on Tuesday fell back below the key US$80 per barrel mark critical to the confidence of oil bulls.

Brent could be vulnerable too without another spike in Middle East tensions, with US and Iraqi peacemakers continuing efforts for a ceasefire to the Israel-Hamas war - despite Iran's vow to retaliate on behalf of its Palestinian ally.

"The US … has ordered the deployment of a guided missile submarine to the Middle East and suggests that Iran could attack Israel within hours," said Phil Flynn, energy analyst at Chicago's Price Futures Group. "Yet oil prices are easing because it appears the market is wondering whether this attack will happen or is it 'the little boy that cried wolf.'"

WTI settled Tuesday's trade down US$1.71, or 2.1 per cent, at US$78.35 per barrel in New York trading. Except for Monday, the US crude benchmark had stayed below the US$80 zone since July 18.

Analysts said oil traders will be seeking proof hereon that Monday's 4 per cent surge in WTI was not just a flash in the pan. That run-up came after last week's rally of almost 5 per cent - which followed a 12 per cent slump over four prior weeks. Year-to-date, the US crude benchmark is up around 7 per cent, after rallying 18 per cent earlier.

UK-origin Brent crude was down US$1.61, or 2 per cent, in Tuesday's New York settlement to finish at US$80.69. Like WTI, Brent regained its US$80 foothold on Monday for the first time since August 1, managing to cling to that key support level in the latest session.

In Monday's trade, Brent rallied 3.2 per cent adding to last week's 3.7 per cent gain. The global crude benchmark had lost 12 per cent over four previous weeks, just like WTI. Year-to-date, Brent is up almost 3 per cent for 2024, after an earlier rally of nearly 20 per cent.

August has been a volatile month for the oil trade. Global markets initially tanked on fears of a US recession and potential contagion effects around the world, sending WTI to a six-month low of US$71.69 and Brent set a new 2024 bottom of US$76.16.

Oil prices began recovering late last week on signs of receding US inflation and increasing odds for the Federal Reserve to cut interest rates in September in what would be its first reduction since 2020. An escalation in Middle East tensions added to last week's rebound.

Healthy weekly consumption numbers for crude reported by the US Energy Information Administration (EIA) have also helped the recovery. US inventories for crude dropped by some 30 million barrels over the past six weeks despite builds in gasoline and distillates. The EIA's weekly update on crude inventory numbers is due on Wednesday.

On the global front, the International Energy Agency, which looks out for the interest of oil consumers, kept its demand growth forecast for 2024 unchanged while trimming the outlook for next year, citing consumption by top crude importer China.

The Organisation of the Petroleum Exporting Countries and its allies, a 23-nation alliance that includes Saudi Arabia and China and is known as OPEC+, cut its 2024 demand forecast though it aims to raise output in October.