NEW YORK (AP) - Crude oil futures tumbled to a ten-week low Friday, extending a selloff that started Monday with easing fears of a war with Iraq.

On the New York Mercantile Exchange, December crude futures dropped $1.15 a barrel to $27.05 a barrel, the lowest level for a front-month contract since Aug. 12.

November heating oil plunged 3.21 cents to close at 72.76 cents a gallon, while November gasoline, bucking the rest of the complex, ended with a gain of 1.92 cents at 86.09 cents a gallon. Traders attributed the strength in November gasoline to shortcovering amid tight supplies.

On London's International Petroleum Exchange, the losses were equally steep. December North Sea Brent fell $1 to close at $25.46 a barrel.

Friday's losses were mostly technically driven, but the fundamental reason for the selling was a "decrease" in U.S. rhetoric on Iraq, said Chris Schachte, an analyst at GSC Energy, a trading house based in Atlanta.

The reduced threat of a war with Iraq has led to a "major contraction" in the war premium built into oil prices on fears of Persian Gulf oil supply disruptions, Schachte said.

Those fears have ebbed considerably this week as the Administration of President George W. Bush has signaled a willingness to avoid a military confrontation with Iraq.

Rather than calling for Saddam Hussein's ouster, Administration officials have in recent days taken to stressing Iraq's disarmament as their primary objective.

Traders also reacted to news that Russia and France circulated proposals to significantly water down a U.S. draft resolution on Iraq, removing language that could authorize military action against Baghdad.

Indications that the Organization of Petroleum Exporting Countries continues to produce well above its official production target also weighed on the market this week, said Aaron Brady, an analyst at Energy Security Analysis Inc., a consulting firm, in Wakefieled, Mass.

Nonetheless, supply-and-demand fundamentals remain strong, suggesting prices will remain strong, Brady added.

"Inventories are still low," Brady said. "That should support prices in the mid- to high-$20s"

U.S. crude oil inventories remain well below their historical levels, despite two weeks of sharp increase, according to data from the Department of Energy.