Crude oil futures fell on Thursday, pressured by continuing weak demand and technical resistance after gains that came on easing euro zone worries and supply disruptions worries. The US Energy Information Administration said domestic crude stocks fell 3.44 million barrels last week, but traders shrugged off the decline, which was far less then the 4.8 million barrel drawdown shown in industry data on Tuesday.
European Union ambassadors failed to agree on details of a plan to embargo crude imports from Iran, though they said their governments still sought to finalise the ban at a meeting on Monday. By 1:05 pm EST (1805 GMT), ICE Brent for March delivery was down 10 cents at $110.56 a barrel in London, after having hit a session high of $111.75. US February crude, which expires on Friday, fell 32 cents to $100.27, having hit an high of $102.06 early.
US crude matched its Wednesday high but "there is no fresh buying, so there is strong resistance and it also reflects weak product fundamentals," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. McGillian also cited the removal of the threat of a cutoff in Nigerian production as unionists there agreed to stop their actions after the government reinstated part of a subsidy on gasoline that was removed early this month. "Demand for products remain weak, and the threat of supply disruptions from Iran, or Nigeria, haven't materialised," said Mark Anderle, trader at TAC Energy in Dallas, Texas.
Oil prices rose in early trade as euro zone worries ere easing and ran warned its Arab neighbours not to align closely with the United States in the rising tensions over Tehran's nuclear program. Good demand for European government bonds, exemplified by a solid Spanish debt auction also partly eased concerns about a potential Greek debt default. US economic data was also positive, with new jobless benefit claims dropping to a near four-year low last week and Mid-Atlantic factory activity ticked up, though not as strong as expected.
Iran's foreign minister warned Arab neighbours not to put themselves in a "dangerous position" by identifying themselves too closely with the escalating dispute over Iran's nuclear activity. Iran' has threatened to close the key Strait of Hormuz oil shipping route on growing international censure for its nuclear ambitions.