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Oil prices dip as traders eye Europe crisis talks

The price of oil fell Wednesday as investors kept one eye on Europe's efforts to solve its debt crisis and the other on the potential for Middle East tensions to disrupt supply.

Benchmark crude for October delivery fell 33 cents to $96.53 per barrel in midday trading in London in electronic trading on the New York Mercantile Exchange. The contract finished 71 cents higher at $96.68 in New York on Tuesday.

Greece's prime minister will meet will key European leaders this week to ask for more time to meet deficit reduction targets. The country's continued access to bailout funds depends on the negotiations.

Traders also awaited the release of minutes from the Federal Reserve's previous policy meeting for signs that it might lower interest rates. Lower rates tend to drive oil prices because they steer investors away from less-risky investments.

Analysts at Goldman Sachs, meanwhile, said tightening supplies and oil-producing Iran's standoff with the West over its nuclear program were factors to be considered in the direction of oil prices.

"In our view, it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supply. Further, as tensions between Iran and the West escalate, the risk to crude oil prices is becoming increasingly skewed to the upside," the analysts said in an email commentary.

Brent crude, which is used to price international varieties of oil, fell 68 cents to $113.96 per barrel on the ICE Futures exchange in London.

In other futures trading on the Nymex, heating oil was down 0.2 cents to $3.11 a gallon. Natural gas was 4 cents higher $2.81 per 1,000 cubic feet.