Crude oil futures fell Tuesday, pulled down by dropping gasoline futures as the summer driving season came to a close.
Also causing prices to fall was Chevron's discovery of new oil supplies in the Gulf of Mexico, as well as the lack of developments in the standoff between the United Nations and Iran, who defied the U.N.'s deadline to stop enriching uranium that could be used to produce nuclear weapons.
Light, sweet crude for October fell 69 cents to $68.50 a barrel in afternoon trading Tuesday on the New York Mercantile Exchange. Floor trading was closed Monday for the U.S. Labor Day holiday.
Gasoline futures fell more than 5 cents to $1.6835 a gallon. They are about 25 percent below where they were a month ago.
"It's a price collapse, one that we haven't seen in gasoline in quite a long time," said Alaron Trading Corp. analyst Phil Flynn, pointing to ample U.S. inventories.
Average U.S. pump prices have followed suit, falling to $2.732 for a gallon of unleaded regular gasoline from more than $3 a gallon (80 cents a liter) a month ago, according to AAA.
On Tuesday, Chevron Corp. said a 300-square-mile (768-square-kilometer) region in the Gulf of Mexico where its test well sits could hold between 3 billion and 15 billion barrels of oil and natural gas liquids. The pool of oil and gas could raise U.S. reserves by as much as 50 percent.
That, along with Labor Day ending the summer's driving season, extended a tumble in the energy markets that began Friday, after the United Nations failed to impose sanctions on Iran for its refusal to cease enriching uranium and a more-subdued forecast for this year's Atlantic hurricane season.
Iran, the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, defied the U.N. Security Council's Thursday deadline to halt its nuclear program. Traders have been worried that Iran might block oil exports if punished by the U.N. At this point, though, American officials and others say no action will be sought before a key European diplomat meets with Tehran's atomic energy chief this week to seek a compromise.
"The fact that U.N. sanctions against Iran are unlikely to be imposed in the short term calmed the market and contributed to the slide," said PVM Oil Associates in Vienna.
Also helping to ease energy prices in recent days were strong U.S. petroleum inventory data and a mixed U.S. jobs report suggesting fuel demand probably won't surge sharply.
Heating oil futures fell 2.24 cents to $1.9450 a gallon.
Natural gas prices rose 12.8 cents to $6.005 per 1,000 cubic feet, as Tropical Storm Florence formed in the Atlantic Ocean. Forecasters say it's likely to strengthen into a hurricane, but it's too soon to tell where it could make landfall.
"Natural gas is more vulnerable to the storm right now than crude; natural gas can't be as easily replaced," Flynn said, reports AP.
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