NYMEX October crude settled at a four-week low of $105.42/barrel, down $1.17, Tuesday as the front-month contract broke below key technical levels on a rapidly diminishing Syria risk premium.
ICE November Brent settled at its lowest level in five weeks of $108.19/b, down $1.88. The front-month contract had traded down to $107.41/b — a six-week low — during the session.
NYMEX October ULSD settled 6.54 cents lower at $2.9983/gal and October RBOB ended the session down 5.55 cents at $2.6611/gal.
“The air is being let out of the Syria balloon,” said Addison Armstrong, analyst at Tradition Energy. “The market is breaking through key technical levels. WTI had a gap-lower open on light volume on the realization that the Syria premium was overdone.”
Investors were targeting NYMEX front-month crude’s August 21 low of $103.50/b as near-term support.
Mike Fitzpatrick, editor of The Kilduff Report, said crude prices continued to fall “as the two-pronged issue of real and imagined supply threats recede.”
“The imagined is Syria, and that situation is in full diplomatic attenuation for now. The UN did declare with finality that sarin gas was used, but the US and Russia are still battling over who did it,” Fitzpatrick said.
Matt Smith, commodity analyst at Schneider Electric, added that the underlying support recently provided by cratered Libyan oil production was waning as two fields restarted output Monday.
The Sharara and Elephant oil fields in Libya restarted Monday and oil production there is said to be around 400,000 b/d, Libya’s Deputy Oil Minister Omar Shakmak said Tuesday. (See story, 0952 GMT)
Meanwhile, investors were tuned to the start of a two-day US Federal Open Market Committee meeting Tuesday, where a decision regarding its massive stimulus program could be made.
“Overall, any reduction in stimulus is negative for commodities and some of that is already worked into prices today,” Armstrong said.
In US economic data, the Consumer Price Index for All Urban Consumers increased 0.1% in August on a seasonally adjusted basis, the Bureau of Labor Statistics reported. The increase was below market expectations of a 0.2% rise.
Over the last 12 months, the all-items index increased 1.5% before seasonal adjustment.
Source: platts.com
