LONDON: Brent crude fell below $97 a barrel on Friday and headed for its biggest monthly drop since April 2013 as rising supplies outweighed fears that US-led strikes against militants in Syria and Iraq would disrupt oil production.
Slowing economic activity in Europe and Asia has dampened demand for oil, while supply is on the rise.
Libya's output has reached 925,000 barrels per day (bpd), the highest level since militias turned on each after the overthrow of Muammar Gaddafi. Even refinery outages and higher US gasoline futures failed to drive US crude higher.
"At the moment, supplies are abundant and demand is weaker," said Andrey Kryuchenkov, an analyst at London-based VTB Capital.
Brent for November delivery was down 18 cents at$96.82 a barrel by 0925 GMT.
US crude slipped 2 cents to $92.51 a barrel. Both contracts were heading for a third straight month of losses, while Brent was also set to record its biggest monthly drop since April 2013 of more than 6 percent.
Air and missile strikes have hit oilfields in eastern Syria in an apparent attack by US-led forces against Islamic State militants, a monitoring group said on Friday.
The military campaign gained momentum as French fighter jets joined those from the United States, while Britain was seeking to join the US-led coalition.
But the global political risk premium for oil remained low as the US-led coalition appeared united and was gaining ground against Islamic State, Kryuchenkov said.
Prices are likely to remain under pressure until European refineries return from maintenance in November and OPEC meets in Vienna on Nov. 27 to consider whether to adjust the output target of 30 million bpd for early 2015, Kryuchenkov said.
Top oil exporter Saudi Arabia is nevertheless likely to keep its output steady throughout the rest of the year as world consumption is expected to rise.
Iranian Oil Minister Bijan Zanganeh called on members of the Organization of the Petroleum Exporting Countries (OPEC) to "make joint efforts" to keep oil prices from falling further.
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