The global oil market is witnessing a complex interplay of factors that are influencing prices, supply, and demand. On Monday morning, crude oil futures traded lower due to a stronger dollar, as seen with September Brent oil futures at $84.34 and August crude oil futures on WTI (West Texas Intermediate) at $80.66. The dollar's rising strength has made commodities like crude oil costlier in the international market, further complicating the market dynamics.

According to Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, in ING Think's Commodities Daily, despite a supportive outlook for the oil market, there were signs of weakness toward the end of last week that carried into early Monday trading. They maintained a supportive stance towards the oil market, anticipating a deficit over the third quarter that would tighten the oil balance.

Geopolitical developments are also significantly impacting the oil market. The Israeli forces' advance into Gaza and Ukrainian drone attacks on Russian oil refineries have disrupted supplies from Russia. Furthermore, Petroecuador, the state oil company of Ecuador, has declared force majeure over deliveries of Napo heavy crude for exports due to the shutdown of a critical pipeline and oil wells, caused by heavy rains.

In Singapore, oil prices remained relatively stable on Tuesday following a rise in the previous session fueled by expected increased fuel demand during the summer. Investors, however, were cautious ahead of the U.S. consumer price data. Brent futures for August settlement eased slightly to $85.96 a barrel, while U.S. crude futures dropped marginally to $81.60 a barrel. Both benchmarks had risen about 3% over the past week, marking two consecutive weeks of gains.

Independent market analyst Tina Teng highlighted that the surge in oil prices was triggered by optimistic demand outlooks and reduced U.S. inventories. With the Northern Hemisphere entering peak summer consumption and the approaching hurricane season, demand is expected to continue rising in the coming months. However, concerns about high interest rates potentially limiting growth in fuel consumption by curtailing economic expansion remain prevalent among investors.

The U.S. crude oil inventory metrics also play a crucial role in shaping market sentiments. A preliminary Reuters poll indicated that U.S. crude oil stockpiles were expected to have fallen by 3 million barrels in the week ending June 21. Gasoline and distillate inventories have also likely seen declines, adding to the overall bullish sentiment in the oil market.

Geopolitical risks continue to underpin oil prices, adding to the uncertainty in the energy supply landscape. Ukrainian drone attacks on Russian refineries and an EU package of sanctions against Russia—banning the reloading of Russian liquefied natural gas (LNG) in the EU for further shipment—are critical factors influencing supply concerns. These measures could lead to tighter global energy supplies, as highlighted by ANZ Research analysts. The market remains wary ahead of the Iranian elections, where a hard-line president could escalate conflicts with the U.S., Israel, and Saudi Arabia.

In the Middle East, fears of a potential war between Israel and the Iran-backed militia Hezbollah have brought geopolitical tensions back into focus. The top U.S. military officer, Air Force General CQ Brown, warned that Iran might support Hezbollah more aggressively if Israel launched an offensive in Lebanon. Such tensions previously spurred oil prices to annual highs in April when concerns about a broader conflict disrupting Middle East crude supplies loomed large.

On the demand side, while China, the world's largest oil importer, faces economic challenges that might dampen its oil consumption, the United States is entering its peak summer driving season. This seasonal rise in gasoline consumption is bolstering oil demand. Economist and analysts are closely monitoring upcoming U.S. economic indicators, especially the personal consumption expenditures index, which could provide more clues about the Federal Reserve's stance on interest rates. High borrowing costs could potentially curb economic growth and, consequently, oil demand.

Lastly, traders are also closely watching the impact of summer demand on oil stockpiles. Any significant drawdown in inventories will likely support the bullish case for higher prices. However, the market must contend with uncertainties surrounding geopolitical tensions and economic growth, making it a volatile yet crucial period for global energy markets.