IV:Crude oil off the lows after China PMI, Syria strike delay weighs
Investing.com - Crude oil futures declined on Monday, albeit off the worse levels of the session, as investors digested a pair of upbeat reports on the Chinese manufacturing sector.
Oil futures plunged more than 2% at the open after U.S. President Barack Obama delayed an imminent strike against Syria.
Prices rallied last week amid indications the U.S. was close to taking military action against Bashar al-Assad’s government.
On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD106.69 a barrel during European morning trade, down 0.9%.
Nymex oil futures fell by as much as 2.4% earlier in the session to hit a daily low of USD105.06 a barrel, the weakest level since August 23. The October contract settled 1.05% lower at USD107.65 a barrel on Friday.
Oil futures were likely to find support at USD104.32 a barrel, the low from August 23 and resistance at USD108.74 a barrel, Friday’s high.
Trading volumes were expected to remain light on Monday, with U.S. markets closed for the Labor Day holiday. Regular trading on Nymex will resume on Tuesday following Monday’s Labor Day holiday.
Oil prices tumbled earlier amid fading expectations for imminent U.S. military action against Syria.
President Obama said Friday that he will seek approval from the U.S. Congress before ordering a military strike against Syria. A decision is not expected before September 9, when U.S. lawmakers return from recess.
Oil prices surged to a 27-month high of USD112.22 a barrel on August 28 amid growing speculation the U.S. was moving closer to taking military action against Syria’s government.
U.S. Secretary of State John Kerry said that the U.S. would punish Syrian President Bashar al-Assad for a "brutal and flagrant" chemical weapons attack that killed nearly 1,500 people in Damascus last week.
Futures recouped some losses after data showed that China’s final HSBC Purchasing Managers Index inched up to a four-month high of 50.1 in August, unchanged from a preliminary reading and up from 47.7 in July.
The upbeat data was published one day after a government report showed that China’s manufacturing purchasing managers' index climbed to a 16-month high of 51.0 in August from 50.3 in July, beating forecasts for 50.6.
A reading above 50.0 indicates industry expansion, below indicates contraction.
China is the world's second largest oil consumer after the U.S. and manufacturing numbers are used as indicators for fuel demand growth.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery shed 0.5% to trade at USD113.41 a barrel, with the spread between the Brent and crude contracts standing at USD6.72 a barrel.
