IV:Crude oil trades near 4-week low on easing Syria fears, Fed in focus
Investing.com - Crude oil futures traded near a four-week low during European morning hours on Tuesday, as diminishing fears over U.S. military intervention in Syria continued to weigh.
Traders now turned their attention to this week's U.S. monetary policy decision on Wednesday.
On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD105.66 a barrel during European morning trade, down 0.5%. The November contract settled 1.5% lower at USD106.59 a barrel on Monday.
New York-traded oil futures fell by as much as 1.25% earlier in the day to hit a session low of USD105.25 a barrel.
Oil futures were likely to find support at USD105.06 a barrel, the low from September 1 and resistance at USD108.64 a barrel, the high from September 13.
Oil prices remained under pressure after the U.S. and Russia reached a diplomatic solution on how to handle Syria’s chemical weapons over the weekend.
U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov agreed on a framework for Syria to destroy its chemical weapons stockpile by the middle of 2014.
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.
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.
Countries in the Middle East were responsible for nearly 35% of global oil production in 2012.
Meanwhile, investors shifted their focus to the Federal Reserve’s two-day policy meeting, which begins later in the day, amid expectations the central bank will start tapering its USD85-billion-a-month bond-buying program.
Market analysts expected the Fed will start cutting monthly purchases by USD10 billion to USD75 billion.
Monthly purchases of Treasuries will be scaled back by USD10 billion to USD35 billion, while mortgage-bond buying will remain unchanged at USD40 billion.
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 traders also looked ahead to the release of fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 1.4 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery shed 0.3% to trade at USD109.77 a barrel, with the spread between the Brent and crude contracts standing at USD4.11 a barrel.
