Brent crude oil slipped towards $108 a barrel on Thursday, easing for the first time in three sessions ahead of an expected dip in demand during the refinery maintenance season.
Brent's losses were limited by a report from the International Energy Agency (IEA), which said inventories in the developed world fell by 137 million barrels at the end of last year for the steepest quarterly decline since 1999.
Continue Reading Below
U.S. crude fell more than Brent, dropping as much as 1 percent a day after hitting a near four-month high above $101 a barrel, and following data showing an increase in unemployment claims in the United States last week.
"Demand has been stronger than expected, and we're operating with low stock levels right now, which has been supportive for prices," Antoine Halff, head of the IEA's oil industry and markets division, told Reuters.
The comments reinforced reports by the U.S. Energy Information Administration (EIA) and OPEC. All three major forecasters have raised their expectations for oil demand growth this year, countering earlier expectations for a possible supply glut from higher North American production.
Brent crude oil futures for March delivery, due to expire later on Thursday, were down 44 cents at $108.35 a barrel by 1348 GMT, after closing up 11 cents in the previous session. The April contract was trading down 31 cents at $108.04 a barrel.
U.S. crude, also known as West Texas Intermediate (WTI), was 69 cents lower at $99.68 a barrel, and dipped as low as $99.69 a barrel.
U.S. crude oil traded as high as $101.38 on Wednesday, its strongest since Oct. 18, after data showed TransCanada Corp's Gulf Coast pipeline has begun to drain oil in earnest from the benchmark delivery point in Cushing, Oklahoma.
Stocks at the delivery point fell by 2.7 million barrels last week, EIA data showed. Bottlenecks at the oil hub have depressed WTI prices for three years.
U.S. crude narrowed its gap with Brent to less than $8 on Wednesday, the smallest since early October. The spread <CL-LCO1=R> widened on Thursday to around $8.60 per barrel.
"A further draining of crude stocks at Cushing is assumed by many," Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, said in a note to clients.
U.S. oil stocks climbed by a more-than-expected 3.3 million barrels in the week to Feb. 7, while distillate stocks fell by a smaller-than-expected 731,000 barrels, EIA data showed.
Crude oil demand traditionally dips in the second quarter of the year as large northern hemisphere refineries reduce capacity for maintenance.
But the oil market is concerned by faltering supply with eyes on OPEC producers Libya, Iraq and Iran, all of which have been pumping well below capacity in recent years.
Oil prices may find some support from the potential for further supply interruptions from Libya, where protesters have shut gas and oil pipelines from the Wafa oilfield and blocked another line from the larger El Sharara field.
A spokesman for Libya's National Oil Corporation said production had fallen to 460,000 bpd.