TOKYO: Brent crude futures gained ground above $111 a barrel on Wednesday, after falling more than 4 percent in the past two days as fears eased of an imminent strike against Syria.
US President Barack Obama vowed on Tuesday to explore an initiative from Russia to neutralize Syria's chemical weapons, but he voiced scepticism about it and still sought support for his threat to use military force should diplomacy fail.
Prices could spike if any move against Syria spills over into violence in the Middle East's main oil producing countries.
Brent crude for October was trading 32 cents higher at $111.57 a barrel by 0440 GMT, after dropping to a two-week low of $110.59 and closing down $2.47 on Tuesday.
US crude for October delivery was down 28 cents at $107.11 a barrel.
The uncertainties over Syria had created a risk premium of about $5 that pushed Brent above $117 last month, but the market has almost returned to around levels from before the crisis, said Ken Hasegawa, a commodity sales manager at Newedge Japan.
Brent hit a six-month high of $117.34 a barrel on Aug. 28.
"All has not been solved and not set, with uncertainties lingering," he said. But "Syria's problem has eased, with market's attention returning to the US financial policies."
Many analysts say the US Federal Reserve will decide next week to begin tapering its monetary stimulus, although last Friday's disappointing US jobs data convinced many economists that any withdrawal will probably be gradual.
Any cut in the Fed's stimulus would likely strengthen the dollar, which would hit oil and other commodities priced in the greenback.
US crude stocks fell by 2.9 million barrels last week, compared with analyst expectations for a decrease of 1.5 million barrels, data from the American Petroleum Institute showed on Tuesday after the settlement.
Gasoline stocks rose by 195,000 barrels, compared with expectations in a Reuters poll of a 1.3 million barrel decline.
Investors await Wednesday's more closely-watched report from the EIA, to be released at 10:30 a.m. EDT.
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