Oil was slightly easier on Thursday, with Brent crude hovering around $123 a barrel, as a drop in U.S. gasoline stocks and continuing conflict in Libya overrode concerns of high prices sparking demand destruction.
On the day commodities giant Glencore unveiled plans for what could be London's biggest ever IPO, Brent crude for May fell 9 cents to $122.79 a barrel by 1028 GMT while U.S. May crude fell 15 cents to $106.96 a barrel.
U.S. gasoline stocks plunged by 7 million barrels last week to their lowest level since October as refiners cut processing rates and cleared inventories of winter-grade fuel, data from the U.S. Energy Information Administration showed.
The significantly higher-than-expected fall was bullish for crude and helped support prices in a week dominated by talk of costly oil crimping demand and stifling the nascent global economic recovery.
This week the International Energy Agency and Organisation of the Petroleum Exporting Countries both warned high prices could dent demand but did not change their global demand forecasts, and analysts were divided over the impact.
Barclays Capital analysts said in a note it was premature to suggest signs of destruction were noticeable and the threshold for a substantial price driven demand reaction was higher than in 2008.
"Downside risks to oil demand from external factors and from high oil prices themselves remain, but equally, the struggle in the Middle East may take a turn for the worse providing further supply outages," said Barclays Capital analyst Amrita Sen.
"Fundamental demand data have shown few signs of fatigue just yet, and, thus, in our view, it is too premature to weigh in on either side of those risks as the determining factor in the coming weeks."
Libyan rebels are exporting a "minimum amount" of crude from fields which are pumping around 100,000 barrels per day, way less than the country's usual production at 1.6 million bpd.
But there is still no clear military strategy to force Muammar Gaddafi from power and JP Morgan said supply is unlikely to rise significantly unless a resolution to the conflict is reached.
"Until then we expect exports to remain low and fluctuate widely, as we have seen in the past in conflict areas," analysts led by Lawrence Eagles said in a note.
CHINESE INFLATION CONCERNS
Annual inflation in China, the world's second-largest oil consumer after the United States, accelerated faster than expected to between 5.3 and 5.4 percent in March, Hong Kong's Phoenix TV said, citing an unnamed source.
China is set to release official first quarter GDP figures and March consumer price data on Friday.
The reported inflation figure was slightly higher than the 5.2 percent forecast in a Reuters poll of economists and sparked concerns of a possible further increase in the reserve requirement for mainland banks to reduce liquidity in the monetary system.
Such a move to curb inflation and cool the speed of growth would be likely to dampen demand and weigh on commodity prices.
The market will also be keeping an eye on U.S. weekly unemployment claims, scheduled for release at 1230 GMT.
(Additonal reporting by Florence Tan; editing by Keiron Henderson)