Oil falls to $109 as Syria deal eases concerns
London, September 16, 2013
Global oil prices fell towards $109 a barrel on Monday after the US agreed to call off military action against Syria, easing supply concerns.
Brent crude for delivery in November fell by almost $3 to $108.73, its weakest level since August 12,
Oil pared some of those losses to trade $2.21 down at $109.49 by 1241 GMT after protesters in eastern Libya denied a deal had been struck with the government and said terminals there would remain closed until their demands had been met.
US oil for October delivery was trading down $1.56 cents a barrel at $106.65 at 1242 GMT after hitting a low of $106.48 earlier in the session.
"The most important factor is the lower perception of geopolitical risk. This has brought prices under significant pressure," said Carsten Fritsch, oil analyst at Commerzbank.
Benchmark front-month Brent futures touched a six-month high of $117.34 a barrel in late August amid worries that a possible U.S. military strike against Syria might further disrupt oil supplies in the region, where unrest in Libya has already sent production to a post-war low of 150,000 barrels per day.
But prices began to drop after Russia offered to help put Syria's chemical weapons under international control
The decline in oil prices came despite weakness in the dollar, which typically makes dollar-denominated assets cheaper for holders of other currencies.
The dollar fell to a near four-week low against a basket of major currencies as investors bet that the U.S. Federal Reserve would take longer to end its stimulus programme after Larry Summers, a former treasury secretary, withdrew from the race to succeed Fed Chairman Ben Bernanke.
Harry Tchillinguirian, oil analyst at BNP Paribas, said uncertainty over who would succeed Bernanke and over the direction of U.S. monetary policy would likely boost demand for risky assets such as dollar-denominated oil and put a floor under oil price declines for now. - Reuters