By Victor Reklaitis and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) — Crude-oil futures wobbled between small gains and losses Wednesday after President Barack Obama said that diplomatic measures may resolve a standoff with Syria.
Crude oil for October delivery CLV3 +0.31% was last down 3 cents, or less than 0.1%, to $107.36 a barrel in electronic trading.
President Obama in a televised speech late Tuesday said he will send Secretary of State John Kerry to Geneva to meet Russian Foreign Minister Sergey Lavrov to work on a plan to have Syria turn over its chemical weapons to the international community.
With a diplomatic process in motion, Obama asked Congress to postpone a vote on whether to authorize military strikes.
“The de-escalation of the Syrian crisis has caused oil prices to fall sharply,” said Commerzbank Commodity Research analysts in a note Wednesday. “In view of the abating geopolitical risks, oil prices are likely to fall further, for the oil price level is still too high from a purely fundamental perspective.”
On the other hand, the commodities research team at Goldman Sachs said risks to oil prices are still skewed to the upside over the next several months, even though recent political events have cut the chances for U.S. military intervention in Syria.
Oil prices last week jumped about 3% after the Obama administration pressed for a military response in Syria, saying President Bashar al-Assad’s regime used chemical weapons against its own civilians in a deadly attack late last month. But futures prices on Tuesday fell 1.9% as Syria’s foreign minister reportedly agreed to Russia’s proposal to relinquish control of its chemical weapons to avert a U.S. military attack.
On Monday, oil prices pulled back from their highest level in more than two years.
Oil prices late Tuesday stayed lower, even though a report showed weekly crude supplies fell by more than expected. The American Petroleum Institute said supplies fell 2.9 million barrels for the week ended Sept. 6. Analysts polled by Platts expected a decline of 2 million barrels.
But gasoline stockpiles rose 195,000 barrels, compared with expectations for a fall of 1 million barrels. Distillate supplies increased 807,000 barrels, while analysts were looking for a climb of 800,000 barrels.
The API data came ahead of the Energy Information Administration’s report, which is often seen as more definitive. It’s due at 10:30 a.m. Eastern time.
Meanwhile, Barclays said Tuesday that implied oil demand from China moderated 4%, to 9.37 million barrels a day in August from 9.77 million barrels a day in July as a seasonal correction and maintenance kept demand muted.
However, improving exports and modest investment growth should support demand in coming months, Barclays analyst Sijin Cheng said in a research report.
“Already, headline data have improved: Industrial production in August beat the forecast and grew 10.4%” on a year-over-year basis, she wrote.
Also, after a few volatile months “due to a government crackdown on false trade receipts, exports have shown signs of recovery, as growth becomes more sure-footed in Europe, the U.S. and Japan.”
China is the world’s second-largest oil consumer.
October Brent crude UK:LCOV3 +0.62% , the European benchmark, gained 46 cents, or 0.4%, to $111.71 a barrel.
In other moves in the energy complex Wednesday, October gasoline RBV3 +0.43% edged up less than 1 cent to $2.74 a gallon, and October heating oil HOV3 +0.51% rose 1 cent, or 0.4%, at $3.08 a gallon.
October natural gas NGV13 -0.28% dipped nearly 2 cents, or 0.4%, to $3.57 per million British thermal units.
Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
