U.S. crude oil inched lower on Thursday after U.S. heating oil stockpiles fell less than expected and Chinese economic data disappointed.
Sustained cold weather has driven demand for heating oil higher in recent weeks, supporting crude oil prices. Weekly data from the U.S. Energy Information Agency, however, showed stockpiles of distillates, including heating oil, fell by just 339,000 barrels last week. Analysts anticipated a 2 million barrel draw.
Also weighing on oil was data from China that showed manufacturing activity shrank in February to the lowest in seven months and employment fell at the fastest pace in five years.
Losses were muted, however. Crude stocks at the Cushing hub in Oklahoma fell by 1.73 million barrels as a new pipeline drained supplies from Cushing, the WTI contract's delivery point, to the Gulf Coast, which supported prices.
Positive U.S. manufacturing activity in February and a drop in unemployment benefits also lent some support.
"(The EIA data) was not enough to spark new buying after the big run up we've had and the China data was bearish," said Phil Flynn, an analyst at Price Futures Group in Chicago.
Brent settled 17 cents lower at $110.30 a barrel (1749 GMT) after settling at its highest price of 2014 on Wednesday.
U.S. crude oil for March delivery, which expired Thursday, settled 39 cents lower at $102.92. U.S. crude for April delivery, which will become the front month contract on Friday, settled 9 cents lower at $102.75.
April Brent's premium to U.S. crude <CL-LCO1=R> settled 8 cents lower at $7.55, after it narrowed to $7.09 earlier in the session, its tightest point since Oct. 9.
U.S. ultra-low sulfur diesel (ULSD), commonly known as heating oil, rose about 3 cents to $3.1777.
GLOBAL SUPPLY CONCERNS
Political risks in Africa and Venezuela partly offset the negative impact on oil from the China survey. Domestic unrest has cut crude output in Libya and South Sudan, and dealers are keeping a watchful eye on protests in Venezuela.
Traders eyed the turmoil in Ukraine, where violence escalated sharply on Thursday, as diplomatic efforts from the European Union or Russia may hold implications for the states' political relations. Russia is the third largest oil producer in the world, and a major supplier to Europe.
Investors are also tracking Iran's nuclear talks.
Six world powers and Iran made a "good start" during talks in Vienna towards reaching a final settlement to the decade-old standoff over Tehran's nuclear program, an EU official said.
A final resolution could lead to a full lifting of sanctions that have curbed oil exports from the OPEC producer.
(By Elizabeth Dilts; Additional reporting by Florence Tan; in Singapore; Editing by David Evans, Dale Hudson, Peter Galloway and Andrew Hay)