MW: Oil prices fall on plans for Syria vote in U.S.
By Carla Mozee and Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Crude-oil futures fell in electronic trade Monday, extending losses as the threat of large-scale U.S. retaliation against Syria was scaled back, easing supply concerns somewhat.
October crude oil CLV3 -1.82% fell 73 cents, or 0.7%, to $106.92 a barrel. Trading on the New York Mercantile was slated to resume Tuesday, following Monday’s Labor Day holiday.
Meanwhile, October Brent crude UK:LCOV3 +0.19% gained 4 cents to $114.05 a barrel.
Monday’s declines for crude oil followed U.S. President Barack Obama’s announcement Saturday that he will seek approval from Congress to launch a strike against Syrian government forces for what the U.S. says was the use of chemical weapons against civilians in an attack last month.
Congress is currently in recess, but some conservative and most liberal members in the U.S. House of Representatives have already raised questions about potential action in Syria.
Oil futures on Friday dropped $1.15, or 1.1%, in Nymex trade after the U.K. Parliament rejected involvement in military action in Syria, cutting into the Syrian-intervention premium for oil.
“While [Syria] was a minor producer even before the turmoil, it sits near major transport and production centers, and the conflict there is seen by some as tossing another potential match into the region’s volatile political tinderbox,” said CIBC World Markets economist Peter Buchanan in a report Friday.
After past spikes, oil has typically declined to precrisis levels or lower, Buchanan said.
Last week, Nymex October crude futures climbed above $110 a barrel to mark their highest settlement since May 2011. They finished August with a 6.8% gain. Also, benchmark Brent crude last week jumped to a six-month high to advance 5.9% for August.
“It is worth noting that while Syria has been the main factor in oil’s bid, other factors, including firmer U.S. and Chinese demand and a drop in production from strife-torn Iraq have also lent support,” wrote Buchanan.
Two separate reports indicated manufacturing growth in China, with world’s second-largest oil consumer.
The HSBC China Manufacturing Purchasing Managers’ Index, released Monday, had a final reading of 50.1 in August, up from an 11-month low in 47.7 in July. On Sunday, China’s government said its official manufacturing index rose to 51.0 from 50.3 in July. Any reading above 50 indicates growth.
In Europe, the euro-zone manufacturing PMI rose to 51.4 in August from 50.3 in July, a slight upward revision from the 51.3 previously announced.
In other energy-futures trade Monday, October gasoline RBV3 -1.89% gave up 1 cent, or 0.5%, to $2.88 a gallon, and October heating oil HOV3 -1.47% added 1 cent, or 0.2%, to $3.14 a gallon.
October natural gas NGV13 +1.47% outperformed other energy products, rising 6 cents, or 1.7%, to $3.64 per million British thermal units.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
