Oil retreats as concern over U.S. attack against Syria eases

Both WTI and Brent benchmarks retreated in early American trading on receding fears that the U.S. will launch an imminent attack against the Syrian regime for using chemical weaponry against its own civilians on August 21. President Obama still faces opposition in the U.S. Senate and it is not clear whether a vote authorizing the attack against Syria will pass. U.S. Secretary of State John Kerry said that military action could be averted, if Assad relinquishes control of his chemical arsenal, something on which the Russian foreign minister agreed to work on.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in October traded at $109.72 per barrel at 14:19 GMT, down 0.73% on the day. Prices fell to a days low of $109.55 a barrel in the late European session, while days high was touched at $110.45, near Fridays two year high. The contract rose by 2% on Friday and settled the week 2.4% higher after surging 1.2% in the preceding one.

Meanwhile on the ICE, Brent oil for delivery in the same month slipped to $114.66 a barrel at 14:21 GMT, marking a 1.26% daily decline. Futures held in a wide range between days high and low of $116.17 and $114.17 per barrel respectively. The contract rose by 0.4% on Friday and settled the week 1.6% higher, capping a fourth straight week of gains.

Oil prices retreated further on the day amid easing concern over an imminent U.S. intervention in Syria as it remains unclear whether Barack Obama will receive authorization by the U.S. Senate to carry out an attack against the Middle Eastern country. The Senate is expected to vote by the end of the week but its top Republican, Kentucky’s Mitch McConnell, hasnt said if he will vote in favor. Barack Obama will meet with Senate Democrats tomorrow and will give a televised address to the nation at 9:00 pm on Tuesday, making the case for intervention.

Meanwhile, Russia and Syria continued to persuade the U.S. not to take military action on Monday, while China advocated for a return to U.N. discussions over Syria. Russian President Vladimir Putin said at the latest G20 meeting that he will keep supporting Assad’s regime and the U.S. will face opposition.

U.S. Secretary of State John Kerry said earlier in the day that the Middle Eastern country could avoid the U.S. attack if it hands over all its chemical weaponry within a week. Following his statement, Russias Foreign Minister Sergey Lavrov said that his country will start work “immediately” to persuade Syria to place its chemical weapons under international control, if that that would help avoid a U.S.-led attack against Syria.

President Bashar al-Assad once again denied to have carried out a chemical attack in the Damascus suburbs on August 21 and said that “there are going to be repercussions” in an interview with co-host Charlie Rose of CBS’s “This Morning” program.

Amrita Sen, chief oil market strategist at Energy Aspects Ltd., said for Bloomberg: “The key reason for the pullback is Syria. 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.”

Oil prices remained pressured throughout the day after data from China showed the Asian country imported less crude in August than in July. According to China’s General Administration of Customs, the Asian country’s overseas purchases fell to a six-month low of 21.43 million tons of crude in August, which was 17.9% lower than July’s 26.11 million tons. The country’s imports exceeded exports by the equivalent of 5.02 million barrels per day from 6.13 million in July.

However, medium- and long-term demand prospects remain bright amid signs of improving economic activity in the worlds second biggest consumer. The Asian nation’s total exports rose by 7.2% last month, exceeding analysts’ expectations for a 5.5% surge. Imports increased by 7%, below projections, but still above July’s 5.1% rise. Chinas trade surplus widened to $28.6 billion from $17.8 billion in July, surpassing expectations for a rise to $20.0 billion.

Meanwhile, the Chinese National Bureau of Statistics reported that consumer inflation rose by 2.6% and remained below the government’s target, leaving extra room for mini financial stimulus, which could provide ground for sustainable growth. China’s producer-price index fell by 1.6% in August after dropping 2.3% in July, marking the smallest decline in six months.