Crude futures fell Thursday, handing back early gains after Energy Department data showed a surprise increase in U.S. oil stockpiles.
Nymex light, sweet crude for February delivery recently traded 85 cents, lower at $98.51 U.S. a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures exchange traded 80 cents lower, at $106.76 U.S. a barrel.
The U.S. Energy Information Administration said Thursday that U.S. oil inventories rose by 3.9 million barrels in the week ended Dec. 23. Analysts, on average, expected stockpiles fell by 2.2 million barrels.
The data, which also showed a drop in implied demand for fuel products, suggested that the massive 10.6-million stockpile decline in the week-earlier report was a one-time event linked to year-end inventory shuffling by refineries.
Stockpiles of distillates, which include heating oil and diesel, increased as well, by 1.2 million barrels.
Gasoline stockpiles fell by 700,000 barrels after analysts had expected a 500,000-barrel drop.
The data forced a retreat from the $100 U.S. a barrel mark that oil prices have stuck to for much of December. Improving economic data in the U.S., the world's largest oil consumer, has created expectations of rising demand. But weakness in Europe continues to drag down crude and other commodities as investors worry about the consequences of the region's debt crisis.
Meanwhile, statements from the U.S. and Iran regarding the Strait of Hormuz have raised tensions in the oil-producing region and helped put a floor under prices.
The U.S. military warned that it won't tolerate any attempt by Iran to close the strait, which handles roughly 15 million barrels of oil a day.
"Any attempt to close the strait will not be tolerated," George Little, the Pentagon press secretary, said Wednesday. "The strait is an economic lifeline for countries in the Gulf, including Iran."
The statement came in response to earlier threats by Iran to shut the channel if the West pressed ahead with sanctions over the nation's nuclear program.
Front-month January reformulated gasoline blendstock, or RBOB, recently traded 0.73 cents lower, at $2.6440 U.S. a gallon. January heating oil recently traded 0.24 cents higher, at $2.8958 U.S. a gallon.
