Crude oil trims losses ahead of U.S. data; Syria remains in focus

Investing.com - Crude oil futures were lower on Tuesday, albeit off the worse levels of the session as investors looked ahead to key macroeconomic data this week that will determine when the U.S. will begin withdrawing its stimulus measures.

On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD107.49 a barrel during U.S. morning trade, down 0.15%.

New York-traded oil futures held in a range between USD106.56 a barrel, the daily low and a session high of USD107.74 a barrel.

Nymex floor trading was closed Monday for the Labor Day holiday, and yesterday’s transactions will be booked with today’s trades for settlement purposes.

Oil futures were likely to find support at USD104.32 a barrel, the low from August 23 and resistance at USD108.74 a barrel, the high from August 30.

The Institute of Supply Management was to release data on manufacturing activity in the U.S. later Tuesday, amid ongoing uncertainty over the timing of the Federal Reserve's widely expected reduction in monthly bond purchases.

Market players also looked ahead to Friday’s highly-anticipated report on U.S. nonfarm payrolls, which is seen as central to the Fed’s decision on tapering.

Oil traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

The central bank is scheduled to meet September 17-18 to review the economy and assess policy.

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.

Oil prices came off the lows of the session after Russia’s news agency said a rocket launch was detected in the Mediterranean. Israel later said it carried out a joint missile test with the U.S. in the area.

The news shifted focus back to the Middle East, where traders have been warily eyeing escalating tension between the U.S. and Syria.

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.

But prices gave back some gains after President Barack Obama said Saturday that he will first seek approval from Congress before ordering a military strike against Syria.

A decision is not expected before September 9, when U.S. lawmakers return from their summer recess.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery added 0.6% to trade at USD115.05 a barrel, with the spread between the Brent and crude contracts standing at USD7.56 a barrel.

London-traded Brent futures have been well-supported in recent sessions amid renewed concerns over a disruption to supplies from Libya.