Oil prices drop despite Ukraine, Gaza worries

Oil prices fell modestly Tuesday despite geopolitical tensions over war-torn Ukraine and a raging battle in the Gaza Strip.
The US benchmark, West Texas Intermediate (WTI) for August, dipped 17 cents to close at $104.42 a barrel on the contract's final day of trade on the New York Mercantile Exchange.
Brent North Sea crude for delivery in September fell 35 cents to settle at $107.33 a barrel in London trade.
"The rebound that we've seen in the last days seems to have run its course," said Gene McGillian of Tradition Energy.
On Monday, WTI pushed $1.46 higher amid anxiety about fighting in Ukraine between government forces and pro-Russia separatists and the battle between Israel and Palestinians in the Gaza Strip.
European Union foreign ministers agreed Tuesday to speed up wider sanctions against Russia and to examine tougher measures, including in the defense sector, after the downing of Malaysia Airlines flight MH17 allegedly by pro-Moscow rebels.
This list would include "entities and persons, including from the Russian Federation," for providing "material or financial support" to those responsible for the March annexation of Ukraine's Crimea territory and destabilizing the east of the country, where MH17 crashed, said EU foreign affairs chief Catherine Ashton.
Russia is the world's second-largest oil producer. There are fears that tougher sanctions could affect those supplies as well as Russian gas exports to Europe, with Ukraine serving as a major conduit.
In the crude-rich Middle East, UN chief Ban Ki-moon on Tuesday demanded Israel and Hamas halt spiraling violence in Gaza.
The death toll in the 15-day-old war has climbed to more than 620 Palestinians, most of them civilians, and 29 Israelis, all but two of them soldiers.
A sharp strengthening of the dollar on Tuesday, especially against the euro, helped to weigh on the WTI contract. A stronger dollar tends to dampen demand for oil, which is priced in the US currency.
The market was gearing up for the US Department of Energy's weekly petroleum report Wednesday, expected to show a further decline in US crude oil inventories due to strong refinery runs.
"Crude oil processing by US refineries is extremely high at this time of year, and is in fact at a record level at present, which should cause US crude oil stocks to decline further," said Commerzbank analysts in a research note.