Oil futures declined Tuesday after
Libya
said
it resumed production at previously closed oil fields, while traders continued
to retreat from bets on a potential military strike in
Syria
.
Meanwhile, the crude market awaited developments from a key Federal Reserve
policy meeting over the next two days.
Light, sweet crude for October delivery fell 77 cents, or 0.7%, to $105.83 a
barrel on the New York Mercantile Exchange, falling for the third straight day.
Brent crude for November delivery on ICE Futures Europe slid $1.28, or 1.2%, to
$108.76 a barrel.
Libya
,
which has experienced a steep drop in crude production following strikes at its
oil export terminals, is making progress toward returning its output to normal
levels, according to deputy oil minister Omar Shakmak.
Mr. Shakmak told The Wall Street Journal the country resumed pumping crude at
its largest field, Sharara, and overall production was "not less than
500,000 barrels a day."
Recent labor disputes in
Libya
had
reduced the country's oil production to 150,000 barrels a day, a level that's
10% of the country's normal level and led to increased output from nations such
as
Saudi Arabia
and
Iraq
to
offset the losses.
"There's some follow-through selling after yesterday," said Andy
Lebow, senior vice president of energy futures at Jefferies Bache LLC in
New
York
, adding that if Libyan production is truly
increasing that's a "bearish factor" for the oil market.
Both the U.S. and European benchmarks fell to their lowest levels in roughly
three weeks on Tuesday after the U.S. and Russia over the weekend agreed to the
framework of a deal for Syria to turn over its chemical weapons to
international authorities. The agreement eased concerns over possible supply
disruptions in the crude-rich
Middle East
. Traders
had added several dollars to the price of oil in recent weeks, betting that a
military intervention could spread throughout the
Middle
East
--a region that produces a third of the world's oil--and interfere with
the flow of crude through major pipelines and sea routes.
In a research note, analysts at JBC Energy wrote, "the market obviously
assesses the geopolitical risk premium much lower now."
Market participants are also watching for news from the two-day meeting of the
Federal Reserve's Open Market Committee. Many investors expect the Fed to scale
back its $85 billion-a-month bond buying program. The stimulus measure has
helped crude prices by weakening the dollar, making oil cheaper to buy using
other currencies.
The meeting begins Tuesday and will end with a statement at
2 p.m.
Wednesday, followed by a news conference by Fed
Chairman Ben Bernanke.
Front-month October reformulated gasoline blendstock, or RBOB, recently fell
2.46 cents, or 0.9%, to $2.6920 a gallon. October heating oil declined 3.47 cents, or 1.1%, to
$3.0292 a gallon.