Crude oil futures fall 1% as Syria strike concerns recede

Investing.com - Crude oil futures fell for the second consecutive day on Tuesday, as the odds of a U.S. military strike against Syria receded, easing concerns over a disruption to supplies.

On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD108.63 a barrel during European morning trade, down 0.8%.

New York-traded oil futures held in a range between USD108.21 a barrel, the daily low and a session high of USD109.01 a barrel. The October contract settled 0.91% lower at USD109.52 a barrel on Monday.

Oil futures were likely to find support at USD106.55 a barrel, the low from September 3 and resistance at USD110.70 a barrel, the high from September 6.

U.S. President Barack Obama said Monday that he would put plans for a military strike against Syria on hold if the country agrees to a Russian proposal to place its chemical weapons under international control.

Separately, Senate Majority Leader Harry Reid late Monday delayed a vote on authorizing military strikes against Syria that had been scheduled for Wednesday.

While Syria is not a major oil producer, investors fear that the two-year-old civil war could spill over to affect oil supplies in nearby countries.

Market players are also concerned about the involvement of Iran and Saudi Arabia in such a conflict. The two countries are major oil producers.

Oil prices surged to a 27-month high of USD112.22 a barrel on August 28 amid indications the U.S. was close to taking military action against Bashar al-Assad’s government.

Meanwhile, market players digested a raft of economic data out of China, the world’s second largest oil consumer.

Official data showed that Chinese industrial production rose 10.4% in August, beating expectations for a 9.9% increase and accelerating from a 9.7% gain in July.

The upbeat report added to optimism over China’s economic outlook after trade data released over the weekend showed that exports rose more-than-expected in August.

Investors continued to speculate over the timing of the Federal Reserve’s widely expected reduction in monthly bond purchases following Friday’s weaker-than-forecast U.S. jobs report.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery shed 0.6% to trade at USD113.07 a barrel, with the spread between the Brent and crude contracts standing at USD4.44 a barrel.