Brent crude futures slipped towards $111 per barrel this morning as profit taking and inventory data showing weak fuel demand in the United States offset optimism that the world's biggest economies are on a steady recovery path.
US oil inventory data on Friday showed a build-up in refined products and a sharp drop in crude imports in the final week of 2012, triggering worries of weak implied fuel demand.
Front month Brent futures fell 8 cents to $111.23 per barrel by 07.27 GMT, after rising 0.6 per cent last week.
US crude slipped 26 cents to $92.83 per barrel.
It added 2.5 per cent last week after US lawmakers reached a last minute agreement to avert a so-called "fiscal cliff", or tax hikes and spending cuts that had threatened economic growth.
"There is a bit of pullback in oil prices after the rally last week. Oil futures had gained quite a bit last week," said Victor Shum, senior partner at IHS Purvin & Gertz in Singapore.
US employers kept up an even pace of hiring and the country's vast services sector expanded briskly, reports on Friday showed.
Coupled with earlier data showing expansion in the manufacturing sector in the United States and China, this reinforced expectations for buoyant oil demand this year.
Manufacturing in top energy consumers the United States and China grew in December, suggesting oil demand may remain well supported.
"We are expecting an improvement in oil demand from China as well," said Natalie Rampono, senior commodity strategist at ANZ.
ANZ expects Brent to end the first quarter at $118 per barrel and US crude at $96 per barrel.
Global markets will be watching the US Federal Reserve's stance on monetary easing, after top Fed officials and some US economists suggested the central bank might halt its asset purchases this year, she added.
This week's focus will also be on the European Central Bank and its moves to help pull the crisis-ridden region out of recession.
Reuters
