West Texas Intermediate crude fell from the highest level in more than two years as U.S. President Barack Obama struggled to persuade lawmakers of the need for a military strike against Syria.
Futures slid as much as 0.7 percent in New York after two days of gains. Obama will meet on Capitol Hill tomorrow with Senate Democrats, according to a Senate aide who requested anonymity because the meeting hasn’t been publicly announced. The Senate may vote on a resolution by the end of the week. The chamber’s top Republican, Kentucky’s Mitch McConnell, hasn’t said whether he will back a military strike.
“The key reason for the pullback is Syria,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “The market continues to wait and watch every move of the U.S., and there has been little progress in terms of finalizing the strikes.”
WTI for October delivery dropped as much as 77 cents to $109.76 a barrel in electronic trading on the New York Mercantile Exchange and was at $110.08 at 1:48 p.m. London time. Prices rose 2 percent to $110.53 on Sept. 6, the highest close since May 3, 2011. The volume of all futures traded was about 4 percent below the 100-day average.
Brent for October settlement declined as much as $1.72, or 1.5 percent, to $114.40 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $4.72 to WTI futures, from $5.59 on Sept. 6.
Brent advanced for a fourth week last week, its longest gain since February, amid concern that an escalation of the conflict in Syria may disrupt regional oil supplies.
Assad disputes U.S. allegations that he used chemical weapons against civilians last month and said the Obama administration hasn’t proved he did, according to CBS News correspondent Charlie Rose, who interviewed the Syrian president.
Secretary of State John Kerry told a news conference in London today that an “unbelievably small, limited” military strike will be enough to halt Syria’s use of chemical weapons and hasten a political settlement to the 2 1/2-year civil war.
The Middle East accounted for about 35 percent of global oil production in the first quarter of this year, according to the International Energy Agency. Syria borders Iraq, the largest producer after Saudi Arabia in the Organization of Petroleum Exporting Countries.
“There’s a lot going on at the moment and traders are just prepared to keep valuations or prices around current levels as they await further developments, particularly in Syria,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who predicts investors may buy WTI contracts at about $105.70 a barrel.
China’s net crude imports fell in August to the lowest level since September as refiners in the world’s second-largest oil consumer shut the most plants for repairs this year.
China’s overseas crude purchases exceeded exports by the equivalent of 5.02 million barrels a day, according to data released on the website of the Beijing-based General Administration of Customs. That’s 18 percent less than July’s record of 6.13 million. The Asian nation is the world’s biggest oil consumer after the U.S.
Large speculators decreased their net-long positions in WTI by 11,552 futures and options combined, or 3.6 percent, to 305,971 in the seven days ended Sept. 3, the U.S. Commodity Futures Trading Commission said in its weekly report on Sept. 6.