• Crude oil futures have dropped to the lowest level since early June, despite escalating tensions between Israel and Houthi militants in Yemen.
• The oil price risk premium is nearly zero as the market has largely looked past Middle East tensions as a potential threat to crude supplies, according to a Goldman Sachs note Tuesday.

Crude oil futures Tuesday sold off to the lowest level in more than a month, with renewed cease-fire negotiations in the Israel-Hamas war and demand worries weighing on the market.

"Ceasefire negotiations in the Middle East and an uncertain macroeconomic outlook in China are exerting downward pressure on oil prices this week," Claudio Galimberti, director of global market analysis at Rystad Energy, told clients in a note Monday.

"Crude prices in the next few days will largely hinge on economic news from China, the likelihood of US rate cuts and how negotiations progress in the Middle East," Galimberti said.

Here are Tuesday's energy prices:

• West Texas Intermediate September contract: $76.96 per barrel, down $1.44, or 1.84%. Year to date, U.S. crude oil has gained 7.4%.
• Brent September contract: $81.01 per barrel, down $1.39, or 1.69%. Year to date, the global benchmark has gained 5%.
• RBOB Gasoline August contract: $2.41 per gallon, down 5 cents, or 2.29%. Year to date, gasoline is up 14.8%.
• Natural Gas August contract: $2.18 per thousand cubic feet, down 6 cents, or 2.84%. Year to date, gas is down 13%.

Israeli Prime Minister Benjamin Netanyahu has ordered a negotiation team to resume cease-fire talks Thursday, according to a government statement. Netanyahu met with families of Americans held in Gaza on Monday, where he said the conditions for a deal are "maturing."

Summer gasoline demand, meanwhile, is not lifting prices. Market analysts have been forecasting a tighter third quarter, with U.S. crude inventories declining three weeks in a row. But gasoline demand was soft for the week ended July 12, declining by 615,000 barrels per day, according to the U.S. Energy Information Administration.

Daniel Ghali, senior commodity strategist at TD Securities, said demand expectations continue to plummet, which is weighing on the broad commodities complex.

"This time around, supply risks are not providing an offset to the deterioration in demand sentiment," Ghali said. Prices could rebound, however, as positions are now "asymmetrically skewed to the upside" over the next week, Ghali said. TD Securities simulations point to significant buying activity on the horizon, he said.

The oil market has largely looked past the recent exchange of fire between Israel and Houthi militants in Yemen. The Houthis struck Tel Aviv with a long-range drone Friday, killing one person. Israel responded with airstrikes against Houthi targets near the Al Hudaydah Port in Yemen over the weekend, hitting oil facilities.

But the oil price risk premium remains nearly zero as the market has largely looked past Middle East tensions as a potential threat to crude supplies, according to a Goldman Sachs note Tuesday.

"Oil is starting to feel as if it is heading for the doldrums," John Evans, analyst at oil broker PVM, told clients in a note.

Wildfires in Alberta, however, pose a potential risk to crude supplies in Canada though production has remained solid so far, according to Goldman. The worst of the wildfire season likely lies ahead, with a third of the wildfires in Alberta burning out of control, threatening 400,000 barrels per day in production, according to Goldman Sachs.

The oil market should be slightly undersupplied by 200,000 bpd in 2024, as demand growth is forecast to remain healthy this year, according to a note from UBS on Monday.