Brent crude prices fell on Wednesday as rising U.S. crude oil and gasoline stockpiles kept tepid global demand for petroleum in focus, while a weaker dollar and worries about supply disruptions limited losses.
U.S. RBOB gasoline futures led the retreat, dropping more than 2 percent, pressured by the Energy Information Administration's (EIA) weekly report showing inventories rose 1.72 million barrels last week, more than three times the consensus expectations.
EIA said crude stocks in the world's largest oil consumer rose 2.86 million barrels last week, more than the expected rise of 1.7 million barrels.
American Petroleum Institute data, released on Tuesday, also showed a rise in U.S. crude inventories.
Brent's weakness, as U.S. crude seesawed near flat, was attributed to Brent's December contract moving into the front-month spot after the November contract's expiration on Tuesday.
The Brent November contract received a lift from current maintenance-related curbs on North Sea production and from delays to cargoes, which may ease.
"The Brent curve is ... coming under pressure on lack of significant North Sea buying interest that appeared to be (associated) with the expected resumption of normal Buzzard Field production activities next week," Jim Ritterbusch, president at Ritterbusch & Associates said in a research note.
Dollar-denominated oil got support from the weak dollar as the euro touched a one-month high against the U.S. currency on speculation that Madrid will ask for a bailout next month and on positive sentiment from Moody's Investors Service's affirmation of its rating on Spanish debt.
U.S. crude also received support from data showed housing starts hit a four-year high and the S&P 500 stocks index rose for the third consecutive day.
Brent December crude fell 78 cents to settle at $113.22 a barrel, having swung from $112.80 to $114.31.
U.S. front-month November crude edged up 3 cents to settle at $92.12 a barrel, after trading from $91.55 to $92.85.
Brent's premium to U.S. crude ended at $20.63 a barrel based on December contract settlements. The spread, comparing November contracts, reached $24.28 during Tuesday's session, highest since October 2011.
U.S. heating oil futures fell nearly a penny to settle at $3.1894 a gallon. The benchmark distillate contract also pared losses, supported by the EIA inventory data showing stocks fell 2.22 million barrels, a million barrels more than expected.
Gasoline futures fell 6.36 cents to settle at $2.7817 a gallon.
Brent gained in early trade after the Moody's affirmation of its investment grade rating on Spain, helping to ease investor worries that the crisis in the euro region is worsening.
Oil was also bolstered by supply concerns after the European Union slapped fresh sanctions on major Iranian state companies in the oil and gas industry and strengthened restrictions on Iran's central bank.
The West, led by the United States, is pressuring Iran over its nuclear program, which is suspected to have a military purpose. Tehran says it needs the technology to generate electricity.
"The battle continues between the negativity from the slowing of the global economy compared to what global stimulus programs might do to the economy going forward, while geopolitics has continued to remain an issue for market participants," said Dominick Chirichella of New York's Energy Management Institute.
(Additional reporting by Adam Kerlin in New York, Simon Falush and Alice Baghdjian in London and Manash Goswami in Singapore; Editing by Peter Galloway)