The price of oil dipped below US$106 a barrel Monday as traders weighed disappointing U.S. orders for durable goods and the potential for international intervention in Syria.
U.S. benchmark crude for October delivery fell 50 cents, or 0.5 per cent, to $105.92 a barrel on the New York Mercantile Exchange. It swung between $105.56 and $107.37 earlier in the day.
The U.S. Commerce Department said that orders for durable goods had their largest drop in almost a year, reflecting a struggling manufacturing sector. Orders for goods mean to last at least three years fell 7.3 per cent in July.
Traders are watching economic reports closely, speculating about when the Federal Reserve could begin phasing out its economic stimulus. That pullback depends on the health of the economy.
Some see the weak reports as an indication that the Fed might wait before slowing down its stimulus.
The price of oil is has risen about 15 per cent in the past three months on concern that unrest in Egypt and civil war in Syria could disrupt production and exports, especially in Libya and Iraq. It has also raised the spectre of spreading violence that could block important supply routes. There are signs that the United States could be closer to an armed response against the regime of Syrian President Bashar Assad if claims are confirmed that his forces used chemical weapons.
While tension in the Middle East has lifted prices in recent months, lower demand from refineries and the end of summer driving season in the U.S. have created a "template for lower prices," said Stephen Schork, an oil analyst and editor of The Schork Report. Should tensions in the Middle East ease, the price of oil could fall as low as $95 a barrel, he said.
Brent crude, which sets prices for imported oil used by many U.S. refineries, fell 29 cents to $110.72 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Heating oil fell 1.6 cents to $3.0835 per gallon.
— Natural gas rose 3.2 cents to $3.5530 per 1,000 cubic feet.
— Wholesale gasoline fell 3.6 cents to $2.8345 per gallon.
Pamela Sampson in Bangkok contributed to this report.
(TSX:ECA, TSX:IMO, TSX:SU, TSX:HSE, NYSE:BP, NYSE:COP, NYSE:XOM, NYSE:CVX, TSX:CNQ, TSX:TLM, TSX:COS.UN, TSX:CVE)