Oil Spot Price Slides with Syria Talks Ongoing

on Sep 13, 2013

iNVEZZ.com, Friday, September 13: Oil prices today were mixed as U.S. and Russia held talks aimed at resolving the Syrian crisis and investors weighed prospects for tapering of the Federal Reserve’s monetary stimulus.

Talks between U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov in Geneva on a plan requiring Syria to surrender its chemical weapons under international control yesterday produced no immediate result and are due to resume today.
Brent crude oil for October delivery was little changed, trading under $113 a barrel. The contract, which yesterday gained $1.13, is still set for its biggest weekly loss in nearly three months with fears of a U.S.-led military attack on Syria fading.

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West Texas Intermediate crude headed for its first weekly decline in three weeks. WTI for October delivery fell as much as 1.2 cents to $107.31 a barrel in electronic trading on the New York Mercantile Exchange.

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While Syria is not a major oil producer, a possible escalation of the conflict could disrupt production and shipping routes in the Middle East, leading to a rise in the oil spot price. The easing concerns over the Syrian crisis came against the backdrop of a fall in Europe’s industrial production. Yesterday, Eurostat reported that industrial output in the Eurozone dropped 1.5 percent in July month-on-month, suggesting a fall in energy demand in the future.

!m[Brent Set for Biggest Weekly Drop in Three Months](/uploads/story/5470/thumbs/pic1_inline.jpg)
“Eurozone is technically out of recession. But growth momentum is expected to remain anaemic as the structural weakness in the region is unlikely to be resolved in the near term,” AP quoted analysts at DBS Bank Ltd. in Singapore as saying in a research note.

Traders were also reacting to a report showing that U.S. retail sales rose by less-than-expected last month, the latest indication that growth slowed in the third quarter and energy demand from the world’s largest oil consumer could fall in the months ahead.
Another factor weighing on the crude oil price is the expected reduction in the Fed’s commodities-friendly asset-buying programme. According to a Bloomberg survey, the US central bank will decide at its meeting next week to reduce monthly purchases of Treasuries to $35 billion from $45 billion and keep mortgage-bond buying at $40 billion.


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