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Oil prices down on diplomatic efforts to ease Middle East tensions
[SINGAPORE] Oil prices fell in Asia on Wednesday as diplomats tried to ease geopolitical tensions sparked by Turkey's shooting down of a Russian fighter jet on the Syrian border.
Prices had surged on Tuesday following the incident which analysts warned could further heighten tensions among key powers involved in the Syrian conflict and affect crude supplies from the oil-producing Middle East.
The rally was cut short amid a flurry of diplomatic effort to appease a furious Russian President Vladimir Putin who called the shooting a "stab in the back" by "accomplices of terrorists".
UN Secretary-General Ban Ki Moon called for urgent measures to cool down the heat, saying a "credible and thorough review" of the incident would help clarify what happened and prevent a repeat.
The Russian SU-24 attack plane was shot down earlier Tuesday by two Turkish F-16s after it received 10 warnings within a five-minute period, Turkey's envoy to the United Nations said, but Moscow insisted the aircraft was inside Syrian territory.
At around 0215 GMT, US benchmark West Texas Intermediate for delivery in January was down 11 cents to US$42.76 and Brent crude for January was trading seven cents lower at US$46.05. Both contracts jumped by more than US$1 after the shooting.
"Crude prices were bid up on fresh concerns over the Middle East tensions after Turkey shot down a Russian aircraft," said Bernard Aw, market strategist at IG Markets in Singapore.
"However, it is unlikely that the tensions will escalate given the trade importance between the two countries, which means we should see a diplomatic solution," he told AFP.
He said traders are setting their sights on a meeting on December 4 of the Organisation of the Petroleum Exporting Countries for signs on whether the cartel will slash high production levels which have depressed prices in an oversupplied market.
"An agreement to cut the production target will definitely be a booster for oil prices," Mr Aw said.
Attention will also be on a report by the US Department of Energy later Wednesday on last week's commercial crude stockpiles that will gauge demand in the world's top oil consumer.