Oil prices, which have shot up in recent days over the threat of a U.S. strike against Syria, dropped below $108 a barrel Tuesday after Damascus said it would go along with a proposal to turn over its chemical weapons.
By early afternoon in Europe, benchmark oil for October delivery was down $1.87 to $107.65 a barrel in electronic trading on the New York Mercantile Exchange. On Monday, the Nymex contract fell $1.01 to close at $109.52 a barrel.
Oil prices have risen sharply in recent days following President Barack Obama's call for military action against the government of Syrian President Bashar Assad in retaliation for what the White House says was a chemical weapons attack against civilians.
But on Tuesday, a diplomatic solution seemed at hand after Syria said it had accepted a deal pushed by Russia — and based on comments by U.S. Secretary of State John Kerry — to put its chemical weapons under international control for their later dismantling.
Syrian Foreign Minister Walid al-Moallem said Tuesday in Moscow that his government had agreed to the Russian initiative to "derail the U.S. aggression."
Later Tuesday, Obama will meet with senators on Capitol Hill to discuss developments regarding Syria and also plans to make a nationally televised speech from the White House about the issue.
In the oil markets, investors will be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Sept. 6 is expected to show draws of 2 million barrels in crude oil stocks and 1 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
Brent, the benchmark for international crudes, was down $1.50 to $112.22 per barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline fell 2.87 cents to $2.7737 per gallon.
— Natural gas lost 1.9 cents to $3.586 per 1,000 cubic feet.
— Heating oil retreated 3.07 cents to $3.0876 per gallon.
Pamela Sampson in Bangkok contributed to this report.
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