Oil fell more than 1 percent on Monday as markets opened following western air strikes in Syria over the weekend, while a rise in USA drilling for new production also dragged on prices.
Oil prices decline on April 16 during Asian trading, investors are rushing to record profits after the oil market has risen to its maximum since late 2014.
Phil Streible, senior market strategist at RJO Futures in Chicago said: "Some of the ease in Syria is the headline that is bringing it down". Because the attacks were more surgical than anticipated in more extreme scenarios, the market has shrugged off bullish factors, he said.
By 0851 GMT on Monday, Brent crude oil futures slipped $1.34 to $71.24 a barrel, while USA crude futures were down $1.16 at $66.23 a barrel.
"It has got everything to possibly boost it: weak dollar, Syria, potential sanctions, White House uncertainty, China trade". Traders said markets in Asia began cautiously after the weekend strikes, with some relief that the move looked unlikely to escalate.
"As a macro asset-allocator, if you want to hedge your portfolio against geopolitical risk, your prime candidate is oil, especially if that risk is in the Middle East".
Traders said oil markets were receiving general support due to a sense that there were high risks of supply disruptions, including a potentially spreading conflict in the Middle East, renewed U.S. sanctions against Iran and falling output as a result of political and economic crisis in Venezuela.
Andrew Sheets, chief cross asset strategist at Morgan Stanley, told Bloomberg television that now the market is in the midst of a season that tends to support prices in addition to geopolitical tension; but he believes in the longer term the demand for crude will decline due to the rise of alternative energy, and "the supply of oil is also probably going to be declining, because companies have cut back enormously on their capital expenditures, and oil is increasingly hard and expensive to find".
Investors are worrying about the impact of wider conflict in Middle East. Fund managers are grabbing on more Brent futures and options than any time since 2011, according to data form O-ICE. US President Donald Trump has threatened to withdraw the United States from the pact, barring action from Congress and Europe.
Investors added to their bullish position, which is now almost equal to 640 million barrels of oil in past 9 months.
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