Oil lower despite bullish China data; Syria in focus

Oil futures traded lower during Tuesday’s Asian session as traders focused more on the easing of Syria tensions rather than some bullish Chinese economic data released on Monday.

On the New York Mercantile Exchange, light, sweet crude futures for October delivery fell 0.74% to USD106.85 per barrel in Asian trading Tuesday. The October contract settled down 0.85% on Monday as U.S. markets were closed in observance of the Labor Day holiday.

Nymex oil futures fell by as much as 2.4% earlier in the session to hit a daily low of USD105.06 a barrel, the weakest level since August 23. The October contract settled 1.05% lower at USD107.65 a barrel on Friday.

Oil futures were likely to find support at USD104.32 a barrel, the low from August 23 and resistance at USD108.74 a barrel, Friday’s high.

U.S. President Barack Obama said Saturday that he will first seek approval from Congress before ordering a military strike against Syria. A decision is not expected before September 9, when U.S. lawmakers return from their summer recess.

Oil prices had risen in anticipation of a Western offensive against Syria after it became evident the country used chemical weapons against its own citizens. However, the U.K. parliament last week voted against such a strike and President Obama has pledge to seek congressional approval, headlines that have helped diminish fears that a strike against Syria is imminent.

On Monday, data showed that China’s final HSBC Purchasing Managers Index inched up to a four-month high of 50.1 in August, unchanged from a preliminary reading and up from 47.7 in July.

The upbeat data was published one day after a government report showed that China’s manufacturing purchasing managers' index climbed to a 16-month high of 51.0 in August from 50.3 in July, beating forecasts for 50.6.

China is the world’s second-largest oil consumer and is expected to surpass the U.S. as the world’s largest oil importer in the next several years.

Elsewhere, Brent for October delivery was flat at USD114.28 per barrel on the ICE Futures Exchange.