Oil Touches Two-Week Low as Syria Tensions Ease

The Brent-WTI spread widened to $4.81 in early trade before closing at $3.86, its lowest level since Aug. 19.

Investors also received a faint signal that oil exports from Libya could pick up soon. On Monday, the head of the Libyan government energy committee said a group tasked with resolving that country's oil paralysis will brief the General National Congress with proposals on how to end various confrontations, although a union official warned workers could launch new protests if a long-term solution was not found.

Last week, Libya's oil output fell to a post-war low of 150,000 barrels per day compared to its capacity of 1.6 million bpd. Exports have fallen to 80,000 bpd.

Front-month oil futures may also be under pressure because passive commodities investors have been selling front-month positions and taking positions in the second month, a monthly process called the "passive roll."

"You're selling the front month and buying the back month, so maybe it's softening the curve a little bit," said Lebow, indicating the spread narrowed between contracts for U.S. crude for October and November delivery.

Despite total outages that the U.S. Energy Information Administration (EIA) estimated at 2.7 million bpd last month, the Organization of Petroleum Exporting Countries (OPEC) said the world oil market was well supplied and forecast a further drop in its oil market share in 2014.

The EIA raised its 2013 world oil demand growth forecast by 20,000 barrels per day to 1.11 million bpd. In its monthly forecast, the agency cut its oil demand growth estimate for 2014 by 30,000 bpd to 1.19 million bpd.