Oil eased below $83 a barrel today, surrendering some of the previous day's gains when prices surged more than 1 pe cent, buoyed by a weaker dollar and signs of improving US oil product demand.
A slew of US economic data due later in the day, including weekly jobless claims and February leading indicators, will offer more clues on the pace of recovery in the world's largest economy and the outlook for energy demand.
US crude for April delivery shed 38 cents to $82.55 a barrel, after settling $1.23 higher on Wednesday. London Brent crude for May fell 39 cents to $81.57.
Oil got a boost from the US Energy Information Administration's report showing that oil product demand in the world's top energy consumer was up 3.5 per cent last week from a year ago.
US distillate inventories fell 1.5 million barrels and gasoline stocks dropped 1.7 million barrels, deeper than expectations for a 1.1 million-barrel drawdown and an 800,000-barrel decline respectively.
Sentiment was also buoyed by OPEC's decision to leave output targets unchanged at its policy-setting meeting in Vienna.
Members of the Organisation of the Petroleum Exporting Countries, which pumps roughly one in every three barrels of oil, maintained official cuts of 4.2 million barrels per day (bpd).
Since curbing output in December 2008 as the economic crisis intensified, OPEC has seen prices rally from below $40 a barrel to a peak of $83.95 in January, despite lower compliance from some members in recent months.
Today, the US dollar recovered some of its losses against higher-yielding currencies made the previous day, as investors trimmed short dollar positions.
The US currency had fallen yesterday after a benign inflation reading supported the Federal Reserve's renewed pledge to keep interest rates near zero for a few more months.
Further price support came from news that Russian oil major Rosneft faces a possible export deadlock after bankrupt rival Yukos won US and British court injunctions, making cash payments to the state oil company in the West very complex.
Reuters