Oil prices drop as Israel-Hamas ceasefire holds up

After short upswing following border incident last week, the cost of a barrel continues to slide after fighting ends

BANGKOK (AP) — The price of oil fell Monday as a truce between Israel and the militant group Hamas that stopped fighting in the Gaza Strip appeared to hold despite a confrontation late last week.

Benchmark oil for January delivery was down 33 cents to $87.95 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 90 cents to close at $88.28 a barrel on the Nymex after Israeli troops fired on crowds in Gaza surging toward a border fence, killing one Palestinian.

Prior to the shooting, oil prices had been falling, thanks mostly to optimism that the cease-fire agreement between the two sides would prevent a broader conflict in the region that could disrupt crude supplies. The truce was struck last Wednesday to end to an eight-day Israeli offensive against Gaza militants who had fired rockets into Israel, but remains fragile.

Traders were also keeping a close eye on developments in Egypt, said independent oil analyst Stephen Schork. Egyptian President Mohammed Morsi on Sunday moved to grant himself near-absolute power, sparking street clashes between his supporters and opponents.

Brent, which is used to set prices for many international varieties of oil, fell 33 cents to $111.05 a barrel.