Oil prices eased to below $108 a barrel Friday as the U.S. and Russia held discussions in Geneva aimed at getting Syria to give up its chemical weapons.
By early afternoon in Europe, benchmark oil for October delivery was down 93 cents to $107.67 a barrel. The contract gained $1.04 to close $108.60 a barrel on the New York Mercantile Exchange. Oil rose as high as $109.16.
Talks between U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov didn't appear to yield an immediate solution Thursday but were a sign that the Obama administration is willing to give diplomacy a chance. Talks continued Friday.
"I will say on behalf of the United States that President Obama is deeply committed to a negotiated solution with respect to Syria meeting with Lavrov and we know that Russia is likewise," Kerry said Friday after a meeting with Lavrov.
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.
A stronger dollar also helped push down oil prices by making commodities priced in dollars more expensive and a less attractive investment for traders using other currencies. On Friday, the euro was down to $1.3287 from $1.3302 late Thursday in New York.
The easing tensions over Syria came amid figures showing Europe's industrial sector sliding into reverse during July. Eurostat reported Thursday that industrial output slumped 1.5 percent in July from the previous month. Slumping growth in the 17-nation eurozone points toward reduced demand for energy in the future.
"Eurozone is technically out of recession. But growth momentum is expected to remain anemic as the structural weakness in the region is unlikely to be resolved in the near term," analysts at DBS Bank Ltd. in Singapore said in a research note.
The November Brent contract, the benchmark for international crudes, was down 42 cents to $111.11 a barrel on the ICE Futures exchange in London. In other energy futures trading on Nymex: — Wholesale gasoline lost 0.28 cent to $2.7509 per gallon.
— Natural gas fell 2.1 cents to $3.617 per 1,000 cubic feet. — Heating oil retreated 1.36 cents to $3.1028 per gallon.
Pamela Sampson in Bangkok contributed to this report.