NYMEX-U.S. crude falls for third session as Syria fears ebb

SINGAPORE, Sept 17 (Reuters) - U.S. oil futures fell for a third session running to touch two-week lows on Tuesday after a diplomatic resolution to the Syrian crisis calmed worries that crude supply from the Middle East would be at risk.

FUNDAMENTALS

* U.S. crude for October delivery was down 72 cents at $105.87 a barrel by 0047 GMT, after hitting a session low of $105.72, its cheapest level since Sept. 3.

* Brent crude for delivery in November fell 47 cents to $109.60 per barrel, after touching a near one-month low of $108.73 in the previous session.

* Brent dropped 2.4 percent on Monday, its steepest single-day decline since June 20 after the United States agreed to call off military action against Syria in a deal with Russia to remove Damascus's chemical weapons.

* But the U.S., Britain and France warned President Bashar al-Assad that there would be consequences if he failed to hand over Syria's chemical weapons and said a U.N. report on the Aug. 21 sarin gas attack left little doubt that Assad's forces were to blame.

* Iran said it wanted to settle a decade-old nuclear dispute with the West that has raised fears of a new Middle East war, but the United States said it must back words with action.

* The Federal Reserve begins its two-day meeting later on Tuesday and is expected to cut its monthly $85-billion bond purchases by at least $10 billion, which could fuel further weakness in oil prices.

* Libya took the first steps towards restarting some of its oil output as the government said a tentative deal with protesters in the country's west allowed pumping to resume from a major field.

MARKETS NEWS

* Asian shares slipped and the dollar treaded water as global markets braced for the outcome of the Fed's two-day policy meeting at which it is widely expected to begin withdrawing stimulus.

DATA/EVENTS (GMT)

0200 China FDI

0900 Germany ZEW economic sentiment

0900 Euro zone Eurostat trade

1145 U.S. ICSC weekly chain store sales

1230 U.S. Consumer inflation

1400 U.S. NAHB housing market index

2030 U.S. API weekly crude stocks

Federal Open Market Committee begins two-day meeting (Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)

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