• U.S. crude oil settled at $80.83 per barrel as prices pulled back.
• West Texas Intermediate and Brent are ahead by 4.9% and 4.1%, respectively, for the month on hopes for strong summer fuel demand and as tensions simmer between Israel and Lebanon.

Crude oil futures fell about 1% Tuesday as the recent rally took a breather, with traders watching for summer fuel demand and tensions on the Israel-Lebanon border.

U.S. crude oil and global benchmark Brent are ahead by 4.9% and 4.1%, respectively, for the month as prices have bounced back from May doldrums on a more optimistic outlook for summer fuel demand.

But the oil market slipped Tuesday as prices failed to maintain upside momentum, with funds liquidating recently acquired long positions, according to Ryan McKay, senior commodity strategist at TD Securities.

Prices fell as consumer confidence slightly weakened in June, and the Richmond Federal Reserve's manufacturing index fell to -10 this month, down from zero in May.

Here are Tuesday's closing energy prices:

• West Texas Intermediate August contract: $80.83 per barrel, down 80 cents, or 0.98%. Year to date, U.S. oil has gained 12.8%
• Brent August contract: $85.01 per barrel, down $1, or 1.16%. Year to date, the global benchmark is ahead by 10.3%.
• RBOB Gasoline July contract: $2.51 per gallon, little changed. Year to date, gasoline is up 19.6%.
• Natural Gas July contract: $2.75 per thousand cubic feet, down 1.96%. Year to date, gas is up 9.6%.

Though the rally has taken a breather, geopolitical tensions should prevent another rout in oil prices, as tensions between Israel and Lebanon raise the risk of a disruption to crude supplies, according to McKay.

Israel and the Iran-backed militia Hezbollah have threatened war in recent days after trading fire across the Lebanon border for months. Air Force General Charles Q. Brown, the top U.S. military officer, warned Sunday that OPEC member Iran "would be more inclined to support Hezbollah" if Israel launched an offensive in Lebanon.

"A renewed increase in our energy supply risk indicator can support price action in the near term, but ultimately we still argue the upside is likely capped by increasing global supply and potential OPEC+ increases, which puts 2025 balances in question," McKay said in a Tuesday note.

Oil prices hit annual highs in April as Israel and Iran teetered on the brink of war, stoking fears that a wider conflict could engulf the Middle East and disrupt crude supplies. Prices subsequently pulled back as tensions eased.

"Oil markets have so far been immune to the fallout of the Gaza invasion," John Evans, analyst at oil broker PVM, told clients in a note Tuesday.

"However, at a time when there is an expectation of higher-to-be numbers in oil prices, such a sweeping under the carpet of the wider considerations of the conflict is starting to run out of space," Evans said.

Brent prices above $85 per barrel could be the start of more upward pressure on prices as geopolitical risk and bullish fundamentals converge, said Claudio Galimberti, director of global market analysis at Rystad Energy.

U.S. crude oil, gasoline and distillate stockpiles all fell during the week ending June 14 in a sign of strengthening demand. Analysts expect there was an even bigger crude oil draw of 3 million barrels last week, according to a Reuters poll. The Energy Information Administration releases official data Wednesday.

Bob Yawger, executive director of energy futures at Mizuho Securities, said crude oil is "poised to go back on the attack if the EIA throws down another bullish report" tomorrow.

JPMorgan forecasts Brent will hit $90 per barrel by August or September.