Benchmark West Texas Intermediate crude for November delivery fell 46 cents to finish at US$103.13 a barrel on the New York Mercantile Exchange, the lowest close since July 30, after hitting a day low of $102.30 earlier. Oil has dropped 6.7 per cent since closing at a two-year high of $110.53 on Sept. 6.
Some analysts said that a seeming thaw in relations between Iran and western powers and apparent diplomatic progress over the elimination of Syria's chemical weapons were easing fears of a potential disruption in oil supplies.
President Barack Obama on Tuesday welcomed the new Iranian government's pursuit of a "more moderate course," saying it should offer the basis for a breakthrough on Iran's nuclear impasse with the United Nations and the U.S.
Sanctions against Iran's oil sector have cut the Islamist Republic's exports from 2.5 million barrels in 2011 to 1.2 million.
Obama also called on the UN Security Council to pass a resolution that would enforce consequences on Syrian President Bashar Assad if he fails to follow a U.S.-Russian deal to turn his chemical weapon stockpiles over to the international community. That deal, brokered by U.S. Secretary of State John Kerry, averted a threatened U.S. military strike.
Jim Ritterbusch, president of Ritterbusch and Associates, wrote in a note to clients that much of the recent selling "would appear to represent a process of throwing in the towel as a result of a need to downsize geopolitical risk premium by at least $5 to $6 a barrel."
In other markets, Brent crude, the benchmark for international crudes used by many U.S. refineries, rose 48 cents to US$108.64 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex, wholesale gasoline rose four cents to US$2.66 a U.S. gallon (3.79 litres), heating oil was flat at US$2.96 a gallon and natural gas lost 11 cents to US$3.49 per 1,000 cubic feet.
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