Oil prices ease as Gaza truce holds

An Israeli soldier rests as he waits to be driven out of southern Israel, near the Israel Gaza Strip Border on Nov. 22, 2012. / AP Photo/Lefteris Pitarakis

LONDON Oil prices extended their falls Friday as a cease-fire agreement between Israel and the militant Hamas group that stopped weeklong fighting in the Gaza Strip continued to hold.

Benchmark crude for January delivery was down 28 cents to $87.10 per barrel at midday in London in electronic trading on the New York Mercantile Exchange. The contract rose 63 cents to finish at $87.38 per barrel Wednesday. Markets were closed Thursday for the U.S. Thanksgiving holiday.

• Cease-fire holds as both Hamas and Israel claim victory
• Analysis: Success of Mideast cease-fire demands patience and forward-looking approach

Israel launched an offensive on Nov. 14 to halt rocket fire from Gaza, unleashing some 1,500 airstrikes on Hamas-linked targets, while Hamas and other Gaza militants showered Israel with just as many rockets. A truce reached Wednesday was still intact, easing fears of an escalating war that could spill beyond Gaza and eventually disrupt oil supplies.

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"I think it's a bit of reaction to the cease-fire in the Middle East, said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Brent crude, used to price international varieties of oil, fell 33 cents to $110.53 a barrel in London.

In other energy futures trading in New York:

- Heating oil fell 2 cents to $3.06 a gallon.

- Wholesale gasoline rose 4 cents to $2.75 a gallon.

- Natural gas was steady to $4.02 per 1,000 cubic feet.