Crude-oil futures fell in Asia Wednesday, as an overnight rally fuelled by escalating Middle East tensions fizzled under the weight on a gloomy global economic outlook and a stronger U.S. dollar.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $92.04 a barrel at 0605 GMT, down $0.35 in the Globex electronic session. November Brent crude on London's ICE Futures exchange fell $0.30 to $114.20 a barrel.
Oil futures and energy stocks were about the only bright points in markets Tuesday, after the International Monetary Fund warned that the probability of a global economic slowdown is "alarmingly high."
Analysts say oil prices may continue to find support because of supply-side concerns. Europe's crude market is already tight because of production issues in the North Sea, while a number of conflicts in the Middle East are prompting concerns over potential disruptions of supplies from the region.
"The geopolitical risk premium was boosted from mounting tensions between Turkey and Syria, with Turkey vowing to do what it needs to protect its borders and NATO also drafting plans to protect Turkey," analysts at ANZ Bank said in a note. Of particular concern is the Syrian conflict, which could lead to reduced oil production in northern Iraq, they said.
The North Atlantic Treaty Organization warned Tuesday against any escalation in hostilities between Syria and Turkey after border artillery exchanges, the AFP reported from Brussels. The alliance has "all necessary plans in place to protect and to defend Turkey if necessary," NATO head Anders Fogh Rasmussen said in the report.
Meanwhile, many market participants are interpreting a call by Israeli Prime Minister Benjamin Netanyahu for an early election as an attempt to bolster his political position to facilitate military action against Iran, said Stephen Schork, editor of the Schork Report.
Besides the geopolitical issues, "the most important factor in the relative strength of the oil price is likely to be ultra-expansionary monetary policy of the major central banks," analysts at Commerzbank said in a research note.
Nymex reformulated gasoline blendstock for November--the benchmark gasoline contract--fell 32 points to $2.9555 a gallon, while November heating oil traded at $3.1953, 79 points lower.
ICE gasoil for October changed hands at $1008.00 a metric ton, up $6.00 from Tuesday's settlement.
Write to Gurdeep Singh at gurdeep.singh@dowjones.com
