2013.09.1105:49:22UTC+00Oil hits third day of declines as Syria risks recede

Crude-oil futures slide down Wednesday in electronic transaction, extending declines into a third straight day as U.S. President Barack Obama said diplomatic measures may settle a dispute with Syria over its alleged use of chemical weapons.

Crude oil for October delivery surrendered 27 cents, or 0.3%, to $107.11 a barrel after Obama in a televised speech said he was sending U.S. Secretary of State John Kerry to Geneva to meet Russian Foreign Minister Sergey Lavrov to work on a plan to have Syria turn over its chemical weapons stockpile to the international community.

With a diplomatic process in motion, Obama asked Congress to delay a vote on whether to authorize military strikes.

Oil prices last week hop about 3% after the Obama administration pressed for a military response in Syria, saying President Bashar al-Assad’s regime used chemical weapons against civilians in a deadly attack late last month.

But futures prices on Tuesday relinquished 1.9% as Syria’s foreign minister reportedly agreed to Russia’s proposal to give up control of its chemical weapons to avert a U.S. military attack. On Monday, oil prices retreated from their highest level in more than two years.

Oil prices late Tuesday stayed down, even though a report showed weekly crude supplies step down by more than assumed. The American Petroleum Institute said supplies missed 2.9 million barrels for the week ended Sept. 6, according to sources. Analysts polled by Platts had been looking for a drop of 2 million barrels.

But gasoline stockpiles skyrocketed 195,000 barrels, compared with expectations for a depreciation of 1 million barrels. Also, distillate supplies soared 807,000 barrels, while analysts were looking for a climb of 800,000 barrels in distillates.

The API data came ahead the Energy Information Administration’s report due, often seen as more definitive, at 10:30 a.m. U.S. Eastern time.

Meanwhile, Barclays said Tuesday that implied oil demand from China moderated 4%, to 9.37 million barrels a day in August from 9.77 million barrels a day in July as a seasonal correction and maintenance kept demand muted.

However, developing exports and modest investment growth should support demand in coming months, Barclays analyst Sijin Cheng said in a research report.

“Already, headline data have improved: Industrial production in August beat the forecast and grew 10.4%” on a year-over-year basis, she wrote.

Also, after a few volatile months “due to a government crackdown on false trade receipts, exports have shown signs of recovery, as growth becomes more sure-footed in Europe, the U.S. and Japan.”

China is the world’s second-biggest oil consumer.

In other moves in the energy complex Wednesday, October gasoline was unaltered at $2.73 a gallon, and October heating oil held at $3.07 a gallon.

October natural gas clinched on a 1 cent gain, or 0.2%, to $3.59 per million British thermal units.