U.S. crude-oil futures settled slightly lower Monday, holding close to four-month highs, as traders gauge whether the involvement of world powers in the Syrian conflict will disrupt oil supplies.
Light, sweet crude for July delivery settled 8 cents, or 0.1%, lower at $97.77 a barrel on the New York Mercantile Exchange, after pushing to a nine-month intraday high earlier in the session.
Brent crude on the ICE Futures Europe settled 46 cents lower at $105.47 a barrel.
Oil markets remained on edge following the U.S. government's decision last week to engage with Syrian rebels in their two-year old civil war. The conflict is expected to be at the forefront of the summit of the Group of Eight nations in Northern Ireland, which began Monday.
Although Syria is not a key oil supplier, an expanded conflict in the country could potentially hurt global supplies because of its proximity to large oil producers, such as Saudi Arabia, Iraq and Iran. Still, some analysts and investors say signs of further escalation in the civil war would be necessary to send prices much higher.
The oil market has struggled to "accurately assess the amount of risk premium" that could be attributed to the increasing unrest in Syria, said Jim Ritterbusch, head of oil-trading advisory Ritterbusch and Associates, in a research report late Monday. "We still have some difficulty associating a minor escalation in the Syrian conflict with any significant supply disruptions."
Until last week, crude-oil futures had held close to $95 a barrel for most of the past two months. But futures have been lifted by the potential for military activity by world powers in the Middle East.
Late last week, the Obama administration concluded that chemical weapons were used by the Syrian government in its civil war against rebel groups, an assertion that Russia has dismissed as "unconvincing."
The U.S. has also called for a limited no-fly zone in Syria to be enforced from Jordan, officials said. But Russia, which supports Syrian president Bashar al-Assad, said Monday it would "not permit" a no-fly zone over Syria.
Meanwhile, Iran's president-elect, Hassan Rohani, said he was concerned about foreign intervention in Syria, but said the priority of his government was to strengthen relations with neighbors, including Saudi Arabia. Saudi Arabia, which is the world's largest oil producer, supports Syrian rebels.
Iran, which is a major oil exporter, is under sanctions from Western nations over its nuclear program. Mr. Rohani has said that Iran will be "more transparent to show that its activities fall within the framework of international rules" and would "engage in more active negotiations."
The crude-oil futures market seemed unimpressed by the outcome of elections in Iran, said Julius Walker, global energy markets strategist at UBS in New York. Despite "conciliatory noises" from Mr Rohani, he said the market will first have to see "real change."
Front-month July reformulated gasoline blendstock, or RBOB, settled 4.06 cents lower at $ 2.8561 a gallon. July heating oil settled 1.19 cents lower at $2.9503 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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