OilBarrelCorbisBarbaraDavidson460Brent crude oil futures fell more than 1% on Monday as concerns of an imminent strike on Syria eased, and traders reduced positions taken amid fears of supply disruption in the Middle East.

US President Barack Obama will give a televised address to the nation on Tuesday, making the case for intervention.

“Brent is coming off as there is still no news of an imminent US strike so people are taking money off the table,” said Rob Montefusco, oil trader at Sucden Financial.

Obama has met with resistance in the US Senate as he seeks approval for military strikes against Syrian forces. US Secretary of State John Kerry said Syria could avoid a strike by turning over chemical weapons.

Brent crude oil for October delivery dipped to a low of $114.15 per barrel, below the 10-day moving average, and was last trading $1.30 lower at $114.82 at 1500 GMT.

Front-month US crude oil futures were down 77 cents a barrel $109.76, after dipping to $109.50.

US oil settled at its highest price in more than two years on Friday as traders bought into a rally on fears that military action against Syria would create civil unrest throughout the Middle East, which pumps a third of the world’s oil.

Russia and Syria urged Washington against military action on Monday, while China called for US caution and a return to the United Nations to discuss Syria.

Assad said in an interview that a US military strike would lead to retaliation in “different forms”.

The global oil market is already coping with a loss of additional supplies from Libya.

“We’re still missing crude oil out of Libya and that continues to pressure supplies,” said Olivier Jakobs, analyst at Petromatrix.

The decline in oil prices was somewhat limited by some signs of global economic recovery, which would stoke oil demand.

China’s broad exports rose more than expected in August, boosted by improving demand for the country’s goods in major markets.

Rising equities broadly signal economic improvement, which would mean higher oil consumption.

Employment figures reported by the US Department of Labor on Friday were less promising than the market expected but other data showed signs of growth in the world’s largest oil consumer.

“Some of the smaller, micro data like manufacturing was better,” said Bill Baruch, senior market strategist at iitrader.com in Chicago. “Outside of the jobs data, it was encouraging to oil demand overall,” adding that he did not view today’s price action as a “down day” but more of a market consolidation.

As well, a poll of US economists said they expect the US Federal Reserve to announce next week it will trim its asset purchases by $10 billion.

The Fed’s monetary stimulus program has largely been seen as supporting commodity prices.

This Fed decision is already priced into the market, Baruch added. The agency would have to announce upwards of a “$20 billion” cut in order for oil prices to swing lower, he said.

The market earlier came under some selling pressure after crude oil imports by China, the world’s largest buyer after the United States, hit a six-month low in August.


Information from Upstream was used in this report.