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Oil drops as Obama seeks congressional approval on Syria

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Shutterstock photo - Oil futures plunged in the early part of Monday's Asian session on news that U.S. President Barack Obama will seek congressional approval before launching a military strike against Syria.

On the New York Mercantile Exchange, light, sweet crude futures for October delivery slipped 1.63% to USD105.90 per barrel, extending the contract's loss to a third straight day. The October contract settled lower by 1.06% at USD107.65 per barrel last Friday.

Syria headlines caused traders to overlook some decent U.S. economic data. In U.S. economic news out last Friday, the Thomson Reuters/University of Michigan revised consumer sentiment index for August released Friday rose to 82.0 from a preliminary reading 80.0, beating expectations for an uptick to 80.5.

Also in the U.S., a widely-watched Chicago purchasing managers' index rose to 53.0 this month from 52.3 in July, in line with expectations.

The upbeat data added to speculation the Federal Reserve could taper down its bond purchases at its next policy meeting amid increasing signs of a recovery in the U.S. economy.

The Fed's stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar. Speculation is rampant that tapering could begin as soon as this month.

Last week, the U.K.'s parliament voted against military action against Syria despite evidence to suggest the country used chemicals weapons against its own citizens. China and Russia have also been leaning on Obama to not use military force against Syria.

Fear of a strike against Syria boosted oil prices on speculation increased conflict there could cause supply disruptions. Syria is not a member of the Organization of Petroleum exporting countries, but it shares a border with Iraq, OPEC's second-largest producer.

Market players are also concerned about the involvement of Iran, OPEC's sixth-biggest oil producer. Iran has warned that Western involvement in Syria could lead to region-wide conflict.

Elsewhere, Brent futures for October delivery fell 1.24% to USD112.63 per barrel on the ICE Futures Exchange. - offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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