Oil extends losses as Syria strike fears recede

Oil prices fell further in Asian trade today on receding fears of a disruption in Middle East supply after a US-Russia deal to avert a Western military strike on Syria, analysts said.

 

New York's main contract, West Texas Intermediate (WTI) for delivery in October eased 68 cents to $105.91 in mid-morning trade, while Brent North Sea crude for November declined 35 cents to $109.72.

 

"Crude oil prices fell after a Russia-United States agreement was established to gather and destroy Syria's chemical weapons," Teoh Say Hwa, head of investment at Phillip Futures in Singapore, said in a note.

 

"This helped to ease investor (concerns) as the risk premium attached to possible US military intervention in Syria is now being removed," she said.

 

WTI dropped $1.62 in New York trade yesterday, while Brent eased $1.63 as investors reacted to the weekend deal between US Secretary of State John Kerry and his Russian counterpart Sergei Lavrov to dismantle Syria's chemical weapons by mid-2014.

 

Investors had earlier feared that a possible US-led strike on Syria in retaliation for its alleged use of chemical weapons against its own people would spark a wider conflict in the crude-rich Middle East.

 

Meanwhile, traders are also awaiting the outcome tomorrow of a Federal Reserve monetary policy meeting.

 

The policymakers are widely expected to announce the start of a pull-back of the central bank's massive asset-purchase programme, known as quantitative easing (QE).

 

"Regardless of the outcome of the Fed meeting, the market is pricing in the possibility that a more dovish stance will be taken," said Kenny Kan, market analyst at CMC Markets in Singapore.