Oil dips below $103 as diplomacy on Syria advances

Oil prices dropped below $103 a barrel Friday, a day after the U.N. Security Council made progress in the quest to get Syria to relinquish its chemical weapons.

By early afternoon in Europe, benchmark oil for November delivery fell 31 cents to $102.72 a barrel in electronic trading on the New York Mercantile Exchange.

The council's five permanent members on Thursday agreed to a resolution calling for Syria to get rid of its chemical weapons. That helped ease fears of an escalation in Syria's civil war since the U.S. has been threatening to attack Syria in retaliation for what Washington says was a chemical gas attack by forces loyal to President Bashar Assad against civilians in suburban Damascus.

The prospect of an attack, and the potential for a disruption in oil supply routes, caused oil prices to spike in recent weeks. Prices have gradually fallen in recent days as diplomacy over Syria advanced.

Reports of progress in talks between Western powers and Iran on the Islamic Republic's nuclear program also weighed on prices as an agreement could end the U.S.-led sanctions against Tehran and significantly increase its oil exports.

"The easing of the geopolitical tensions and the plentiful supply of the market give little reason for any rise in prices," analysts from Commerzbank in Frankfurt said in a note to clients.

Upbeat news about the U.S. economy had pushed prices higher Thursday, ending a five-day losing streak in which oil had dropped $5.41, or 5 percent. But the momentum petered out on Friday.

Brent crude, the benchmark for international crudes used by many U.S. refineries, was down 51 cents to $108.70 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

Wholesale gasoline fell 1.18 cents to $2.6769 per gallon.

Natural gas retreated 2.8 cents to $3.539 per 1,000 cubic feet.

Heating oil lost 1.2 cents to $2.9873 per gallon.

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Pamela Sampson in Bangkok contributed to this report.