WTI near 8-week low on easing Syria tension, global output recovery

Oil prices remained pressured on Tuesday amid expectations that a U.N. drafted resolution this week will back a U.S.-Russian plan to destroy Syrias chemical arsenal and avert military action against the Middle Eastern country. Recovering output in different OPEC members eased concern over global supplies, while market expectations for a bullish crude inventories tomorrow by the EIA put a lid on losses.

On the New York Mercantile Exchange, WTI crude for delivery in November traded at $103.53 per barrel at 6:58 GMT, down 0.06% on the day. Prices ranged between days high of $103.63 and low at $103.32 a barrel, near Mondays 8-week low of $103.16. Light, sweet crude fell 1.1% yesterday and extended its weekly decline to nearly 1.3% after shedding almost 5% in the preceding two five-day periods.

Meanwhile on the ICE, Brent oil for delivery in November rose by 0.01% to $108.18 per barrel at 6:58 GMT. Prices held in range between days high and low of $108.19 and $107.93 a barrel respectively. The European benchmark fell nearly 1% on Monday after settling 2.24% lower last week.

The oil market remained under pressure as investors awaited the outcome of the U.N. Security Council negotiations on Syria this week. The Western partners, the U.S., U.K and France, want to drive through a resolution that provides enforcement of the terms in the September 14 Geneva accord, something which the Russian side opposed. Russian Foreign Minister Sergei Lavrov said that the U.S.-European plan to include threats of force in the resolution is “irresponsible and unprofessional”. However, general expectations are for a peaceful outcome, which would further erode oils geopolitical premium.

Victor Shum, an IHS analyst, said for Reuters: “Geopolitical tensions are reducing and oil output is rising so these two factors are driving oil futures to moderate. The geopolitical tone over Iran has been dialed down. The other development is the continuing progress over Syrias situation.”

Easing global supply concerns were also negative for oil prices as different OPEC members continued to recover some of their recently lost output. Tumini Green, a spokeswoman at Nigerian National Petroleum Corp., said that production in Nigeria has increased to 2.4 million barrels per day after sabotaged lines were restarted. Output in the biggest African producer fell to 2.2 million bpd in the first quarter.

Meanwhile, Iraq boosted production from its Rumaila field after repairing a leaking pipeline, but planned works capped exports. In Libya, Sliman Qajam, the deputy head of the parliament’s energy committee, said on Sunday that the countrys output has recovered to to 600 000 barrels per day after falling to a around 150 000 bpd in the beginning of the month. South Sudan resumed pumping and exports through its pipelines which cross Sudan after a thaw in the relations between the two countries.

Ric Spooner, a chief market analyst at CMC Markets in Sydney, said for Bloomberg: “We are a little bit more relaxed about the Middle East risk. With supply increases in Libya and Nigeria, crude prices are under pressure in recent days. We may see WTI move back to under $100.”