West Texas Intermediate slid for a third day as a U.S. agreement with Russia on disarming Syria’s chemical weapons eased the threat of an imminent attack and as Libya’s oil production recovered.
Futures fell as much as 0.9 percent to their lowest intraday level in two weeks. Secretary of State John Kerry joined French and U.K. diplomats in calling for a United Nations resolution to eliminate Syria’s chemical arsenal, with the goal of forcing President Bashar al-Assad from power. Libya is restoring about 25 percent of its crude output following talks between the government and striking workers, while oil terminals in Mexico reopened as storm Ingrid dissipates.
“The Syria situation all looks more diplomatic now rather than set for a military strike as the U.S. seeks a United Nations resolution,” said Robert Montefusco, a senior broker at Sucden Financial Ltd. in London. “We still have room to the downside, but prices won’t collapse just yet.”
WTI for October delivery dropped as much as $1 to $105.59 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.25 as of 12:49 p.m. London time. The volume of all futures traded was about 20 percent more than the 100-day average.
Brent for November settlement slid as much as 65 cents, or 0.6 percent, to $109.42 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $3.69 to WTI. The spread narrowed for the first time in four days yesterday to $3.88.
UN Secretary-General Ban Ki-moon yesterday briefed the Security Council on a report by an inspection team, which found “clear and convincing evidence” that the nerve agent sarin was used near Damascus on Aug. 21. The U.S. says Assad’s troops fired chemical weapons that killed more than 1,400 people.
Ban pressed the Council to consider ways to enforce a U.S.- Russia plan announced Sept. 14 to eliminate the toxic weapons arsenal. The agreement, which lifted the threat of an imminent military attack, doesn’t constrain Syria’s use of conventional weapons.
The U.S. seeks to end Assad’s rule, Kerry said yesterday in Paris, before the release of the UN report.
“We remain committed to the opposition and committed to the Geneva process, which calls for a transition government,” he said. “That’s our end strategic goal.”
Oil rose to a two-year high on Aug. 28 amid concern an escalation of the conflict may disrupt Middle East exports. Syria borders Iraq and is as near as 150 miles (240 kilometers) to Iran, nations that together control almost a fifth of the production capacity in the Organization of Petroleum Exporting Countries, data compiled by Bloomberg show. The Middle East accounted for 35 percent of global output in the first quarter of this year, according to the International Energy Agency.
OPEC member Libya resumed pumping yesterday at the 140,000 barrel-a-day El Feel and 300,000 barrel-a-day Sharara fields, state-run news agency Lana reported, citing Abdulwahhab El-Gayedi, the head of the parliament’s oil-industry crisis group.
The African nation is producing about 250,000 barrels a day of crude, compared with 1.6 million barrels a day a year ago, as a labor dispute cripples its ability to export.
Remnants of Ingrid, which dissipated from a tropical depression overnight, produced as much as 15 inches (38 centimeters) of rain over a large part of eastern Mexico, according to the U.S. National Hurricane Center in Miami. The oil ports of Cayo Arcas, which processes about 68 percent of Mexico’s crude exports, and Dos Bocas and Coatzacoalcos reopened yesterday.
U.S. crude inventories probably fell last week to the lowest level in a year as refineries operated at more than 90 percent of capacity and supplies declined at Cushing, Oklahoma, the delivery point for New York-traded WTI contracts, a Bloomberg News survey showed.
Stockpiles dropped by 1 million barrels, or 0.3 percent, to 359 million in the week ended Sept. 13, according to the median estimate of nine analysts before a report tomorrow from the Energy Information Administration.
The industry-funded American Petroleum Institute is scheduled to release supply data in Washington today.
In Iran, President Hassan Rohani is ready to decommission its Fordo uranium-enrichment facility in exchange for an easing of international sanctions, Der Spiegel reported yesterday, citing intelligence officials it didn’t identify.
Iran is offering to negotiate a deal on its suspected nuclear weapons program as diplomats from the International Atomic Energy Agency prepare to meet this week in Vienna.