Oil drops toward $106 as Syria tensions ease

Oil drops toward $106 as US asks UN to support deal to eliminate Syrian chemical weapons

Associated Press

BANGKOK (AP) -- Progress in reaching a deal to eliminate Syria's chemical weapons helped put downward pressure on oil prices Friday.

Benchmark oil for October delivery was down 18 cents to $106.21 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $1.68 to close at $106.39 on Thursday. The October contract expires Friday.

President Barack Obama has threatened to launch military action against Syria for an alleged chemical weapons attack against civilians in suburban Damascus last month. But diplomats from Russia and the U.S. came up with a plan to induce Syria to give up its chemical weapons stockpile.

On Thursday, U.S. Secretary of State John Kerry called on the U.N. Security Council to back the U.S-Russia deal, which has reduced the threat of a U.S. military strike.

Fears of instability in the oil-rich Middle East were further allayed after reports signaled a return of more Libyan crude oil to the market. Production and exports have been sharply interrupted in the chaos following the overthrow of longtime dictator Moammar Gadhafi in 2011.

"There's been a bit of a step back in tensions in the Middle East," said Evan Lucas, market strategist at IG in Melbourne, Australia.

Brent crude, the benchmark for international crudes used by many U.S. refineries, fell 9 cents to $108.67 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline rose 1.2 cents at $2.692 per gallon.

— Natural gas fell 2.6 cents to $3.694 per 1,000 cubic feet.

— Heating oil rose 1.7 cents to $3.023 per gallon.

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