Brent oil prices end off 5-month high, Syria supports

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Brent crude oil prices eased off a five-month high of more than $111 a barrel on Monday, but remained strong as tensions in the Middle East were stoked by the increasing possibility of a Western-led military response to an alleged chemical weapons attack in Syria.

Trading was choppy as a sharp drop in U.S. durable goods orders limited gains and added to signs that third quarter economic growth might be slower than economists previously expected.

Brent crude futures for October delivery ended the day 31 cents lower at $110.73 a barrel, after trading as high as$111.68 earlier, the highest since April 2. The contract maintained its position above the 10-day moving average of $110.30 for the first time in five sessions.

Trading was limited by a public holiday in London.

U.S. crude for October delivery ended 50 cents lower at $105.92, after trading as high as $107.37, the highest in four sessions.

A team of United Nations chemical weapons inspectors visited the site of the alleged poison gas attack in Syria on Monday, as military chiefs from the United States and its European and Middle Eastern allies met in Jordan.

Evidence that Syria used chemical weapons is "real and it is compelling", U.S. Secretary of State John Kerry said during a speech. That Syria refused to allow access to the chemical weapons attack site is a sign the regime has something to hide, he added.

Unrest in the Middle East, which pumps a third of the world's oil, has supported Brent crude. Large speculators raised their net long positions in Brent futures and options to a record high in the week to Aug. 20, exchange data showed.

"The fear that the situation in the Middle East could spiral out of control is keeping sellers from coming out of woodwork," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.

Tighter supplies due to output disruptions in the North Sea and Libya and positive economic data from the euro zone and China last week also supported prices, with Brent up by about $12 a barrel since late June.

Trading has been choppy in the past two weeks, however, as the market weighs each piece of economic data against the expectation that the U.S. Federal Reserve might scale back its stimulus program.

The U.S. durable goods number was the second bout of poor economic data after U.S. government figures on Friday showed new home sales dropped to their lowest in nine months.

This supported the notion that the U.S. economy was not quite strong enough for the Fed to begin trimming its economic stimulus program, largely seen as supporting prices.

"We're seeing the poor news on home sales Friday and durable goods today," said Bill Baruch, senior market strategist at iitrader.com in Chicago, Illinois. "It's kept the market in check after the recovery in the last week. It did get ahead of itself."

U.S. crude prices rose to a two-week high of $108.17 on Aug. 16 on the back of stronger data from the world's two largest oil consumers, the United States and China. But U.S. oil futures ended last week 1 percent lower.

Brent's premium to the U.S. benchmark West Texas Intermediate briefly narrowed to $4.02 per barrel, its smallest since Aug. 20. It settled at $4.81.

U.S. gasoline futures were off the three-week high they hit on Friday. They settled at $2.9517 a gallon, close to 2 percent lower.

The gasoline-making unit at Monroe Energy's 185,000 barrel-per-day Trainer refinery was restarting on Monday, industry intelligence group Genscape said. That should add to supplies on the heavily populated East Coast during the summer driving season. (Additional reporting by David Sheppard in New York, Julia Payne in London and Florence Tan in Singapore. Editing by Jason Neely, Peter Galloway and Andre Grenon)



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