By Ben Winkley LONDON--Oil prices continued to fall Tuesday in London, adding to the previous session's sharp losses as the risk premium associated with possible U.S. military action against Syria faded away. The price of a barrel of Brent crude has fallen more than $3 since flirting with six-month highs on Friday, and has now lost half the gains made on Aug. 27 when rising tensions rose over Syria's alleged use of chemical weapons led to the front-month contract making the largest intraday rise this year. Brent crude for October delivery was 65 cents lower at $113.07 a barrel on ICE Futures Europe. U.S. crude-oil futures were down 101 cents, or 0.9%, at $108.51 a barrel on the New York Mercantile Exchange. Syria has agreed to a Russian proposal that it put its chemical weapons under international control. This paused a Senate debate and vote on authorizing military action. Later Tuesday U.S. President Barack Obama will address the U.S. people. With the removal of a large part of the Syrian risk premium, attention will turn to the Libyan supply situation. The Organization of the Petroleum Exporting Countries' monthly report for September, due Tuesday, will be scoured for indications of how much oil the North African country is producing and exporting. There are conflicting reports about the levels of production in Libya, but it widely believed that output has been reduced to a fraction of its normal levels by the closure of many oil ports by armed gunmen in the past month. The OPEC report will also be examined for indications of Saudi Arabian production levels. The Gulf kingdom is expected to fill the gaps left by missing Libyan and Iraqi output, but this removes global spare capacity. Crude prices could come under yet more pressure if there is a diplomatic deal on Syria and a return of production from Libya, said Olivier Jakob at Swiss consultancy Petromatrix. He also noted other potential headwinds on the near horizon--next week's U.S. Federal Open Market Committee meeting brings the risk of tapering; on Sept. 24 the new Iranian president will be addressing the U.N. and will likely want to show how the new administration is different; Iran and the European Union will also meet at the U.N. to set up the schedule for the next round of negotiations between Iran and the P5+1. Latest market data from the IntercontinentalExchange Inc. (ICE) and the Nymex show that net long positions-- bets that prices will rise--held by speculative money in both Brent and WTI remain near record levels hit. This carries with it an inherent risk for further, but limited, correction, said analysts at JBC Markets, in a note to clients. Recently the ICE's gasoil contract for September delivery was down $9.00 at $651.00 a metric ton, while Nymex gasoline for October delivery was down 109 points at 2.7915 cents a gallon.

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