Brent crude futures held steady 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.
U.S. 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 3 cents up at $111.28 a barrel by 0316 GMT, after dropping to a two-week low of $110.59 and closing down $2.47 on Tuesday.
U.S. crude for October delivery was down 54 cents at $106.85 a barrel.
The uncertainties over Syria had created a risk premium of about $5 that pushed Brent above $117 on August 27, but the market has almost returned to around levels from before the crisis, said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"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 U.S. financial policies."
Many analysts say the U.S. Federal Reserve will decide next week to begin tapering its monetary stimulus, although last Friday's disappointing U.S. jobs data convinced many economists that any withdrawal will probably be gradual.
U.S. CRUDE STOCKS FALL
U.S. 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.
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.