Benchmark oil for October delivery was down 81 cents to $107.40 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 39 cents to close at $108.21 on Friday.
American and Russian chemical weapons experts met in Geneva to hammer out a plan for getting Syria to turn over its chemical weapons arsenal. Under the agreement, Syria would provide an inventory of its chemical arsenal within one week and hand over all of the components of its program by mid-2014.
“For now, the peaceful conclusion to the Syrian situation is on the way and I think that we’ll continue to see oil subdued in the short term,” said Stan Shamu, market strategist at IG in Melbourne, Australia.
The U.S. had threatened military action against the regime of President Bashar Assad after his forces allegedly attacked civilians in a rebel-held Damascus suburb with chemical weapons. But the Obama administration, failing to win widespread support for intervention in Syria, opted to work on a diplomatic solution with Russia, a key Syrian ally. There has been no official statement from the Syrian government on the deal.
Syria is not a major oil producer, but oil traders say the possibility of a wider conflict could interrupt production and shipping routes in the Middle East and cause prices to rise. In recent days, oil prices have risen and receded in accordance with the perceived likelihood of a U.S. military attack.
The November Brent contract, the benchmark for international crudes, fell 84 cents to $110.86 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline fell 2.9 cents to $2.728 per gallon.
— Natural gas rose 0.5 cent to $3.683 per 1,000 cubic feet.
— Heating oil fell 2.5 cents to $3.088 per gallon.