Oil prices slip as Syria talks continue

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Oil prices fell Friday as dealers monitored diplomatic efforts to get Syria to give up its chemical weapons and avert a U.S.-led military attack that could disrupt crude supplies.

Brent North Sea crude for delivery in October fell 33 cents to stand at $112.30 a barrel in London midday deals.

New York’s main contract, West Texas Intermediate for October, lost 91 cents to $107.69 a barrel.

Oil prices have fallen this week on easing concerns over a possible strike against Syria and after having risen strongly the previous fortnight.

New York crude had struck $112.24 a barrel at the end of August, which was the highest level for more than two years.

Although Syria is not a major oil producer, traders are nervous about a broader conflict in the crude-rich Middle East region, including neighbouring Iraq, which is becoming a major exporter.

Russian President Vladimir Putin on Friday insisted Syria was serious about giving up its chemical weapons, as Moscow and Washington entered a second day of talks aimed at averting U.S.-led military action.

Ahead of the main meetings in Geneva, U.S. Secretary of State John Kerry and his Russian counterpart Sergei Lavrov first met with the UN-Arab League envoy to Syria, Lakhdar Brahimi, to discuss a parallel proposal for peace talks.

But it was the issue of chemical weapons that was set to dominate, after Syria’s President Bashar al-Assad confirmed for the first time on Thursday that he planned to relinquish its chemical arms.

“Whilst the U.S. Secretary of State John Kerry meets his Russian counterpart Sergei Lavrov in Geneva to try and iron out the details of a deal on Syria, the oil market is likely to retain a sideways pattern,” said analyst Joe Conlan at British-based energy consultancy Inenco.

The U.S.-Russia talks have put off a planned U.S.-led attack on Damascus for an alleged sarin gas attack by Assad forces last month that left hundreds of Syrians dead. Assad blames opposition rebels for the attack.

“Investors remain cautious over the diplomatic efforts to get Syria to surrender its chemical weapons,” added Teoh Say Hwa, head of investment at brokerage Phillip Futures.

Oil prices were also supported by fresh reports of supply disruptions in crude exporter Libya after the country’s National Oil Corporation on Thursday declared force majeure on three ports.

Libyan oil exports plunged in August by more than 70 percent after protesters, including policemen and border guards, forced terminals to shut in a row over pay.

The oil market had climbed on Thursday after the International Energy Agency raised its demand outlook for next year, while sentiment was also underpinned by Syria and Libya.

“Demand growth to pick up speed next year after holding steady for 2013,” the Paris-based IEA said in its monthly report.

The energy watchdog forecast that global demand growth will rise to 1.1 million barrels per day (mbpd) in 2014, as the underlying macroeconomic backdrop improves.

The agency left unchanged its 2013 demand growth forecast at 895,000 bpd, citing stronger-than-expected oil deliveries in July that offset concerns about the impact on demand in emerging-market economies from currency fluctuations.

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