Oil futures moved lower Friday, as uncertainty over the status of a potential military strike against Syria pushed crude prices down for the second straight day.
Light, sweet crude for October delivery fell $1.01, or 0.9%, to $107.81 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe was off 32 cents, or 0.3%, to $114.82 a barrel. Volume for both the U.S. and European benchmarks was lighter than normal ahead of the long Labor Day weekend when U.S. markets are closed Monday.
Oil futures spiked Tuesday and Wednesday amid concerns that possible military action against the regime of Bashar al-Assad would lead to supply disruption in the Middle East, where about one-third of the world’s oil is produced.
The rally, though, took a breather Thursday and extended into electronic trading and overseas markets after the U.K. Parliament voted against a government motion to interfere in Syria in response to last week’s alleged chemical attack. The defeat left the Obama Administration weighing a potential unilateral strike and pushed back the prospects of a U.S. intervention.
“People are taking some time to remain cautious,” said Carl Larry, president of Oil Outlooks and Opinions.
“Nobody wants to lose a position politically or commodity-wise since nothing is resolved,” he said, though he noted that despite the recent declines, crude “isn’t falling back as fast it ran up.”
While crude prices climbed 4% earlier this week, oil futures have given back just half of those gains over the last two trading sessions.
In a research note, Dominick Chirichella, an analyst at the Energy Management Institute, wrote, “the market has now moved into the wait and see mode, which has brought out a modest round of profit taking selling.”
One factor calming supply fears late Thursday were comments from the International Energy Agency, which said the oil market is adequately supplied and doesn’t need to release emergency reserves. The IEA advises rich, industrialized countries on energy policy and coordinates their emergency oil stockpiles.
Meanwhile, Saudi Arabia, which has the world’s largest oil production capacity, is ramping up its own crude production. According to PIRA Energy Group, a U.S. energy consultancy, the country will average 10.5 million barrels a day in the third quarter, its highest sustained level of production since the early 1980s.
Front-month September reformulated gasoline blendstock, or RBOB, recently fell 2.09 cents, or 0.7%, to $3.0455 a gallon. September heating oil declined 0.70 cents, or 0.2%, to $3.1779 a gallon.