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Oil retreats from 2-year high, falls below $110

The price of oil fell below $110 a barrel, easing off a two-year high, after a report showed a rise in US crude inventories.

PHOTO: Associated Press PHOTO: Associated Press
The price of oil fell below $110 a barrel on Thursday, easing off a two-year high, after a report showed a rise in US crude inventories.

Benchmark oil for October delivery was down 72 cents to $109.38 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange.

The contract rose $1.09, or 1 per cent, to $110.10 a barrel on Wednesday, driven higher by the prospect of Western military intervention in Syria's civil war. That was its highest closing price since May 3, 2011. Earlier in the day, oil charged as high as $112.24.

The American Petroleum Institute said crude stocks for the week ended August 23 rose by 2.47 million barrels to about 366.6 million barrels. Rising supplies tend to hold oil prices down.

Still, JBC Energy said current developments, such as low spare capacity in Saudi Arabia and signs of an improving global economy, pointed to tighter markets.

The oil price has surged 27 per cent since touching a low for the year of $86.68 on April 17.

Recently, it has been propelled higher by political unrest in Egypt and the threat of US intervention in Syria's civil war. Neither country is a major oil exporter, but traders are concerned that the violence could spread to more important oil-exporting countries or disrupt major oil transport routes.

Brent crude, the benchmark for international crudes, fell 76 cents to $115.85 a barrel on the ICE Futures exchange in London.