Brent crude fell on Friday as a U.S. government report showing weak demand for fuel by the world's top consumer outweighed a jobs report that showed employers kept the pace of hiring steady in December.
Gasoline led the oil complex lower on the day, off more than 1 percent, after data from the U.S. Energy Information Administration showed a steep build in stockpiles last week and demand continuing to lag year-ago levels by 2.3 percent.
The report added to bearish concerns about oil markets, which have been closely monitoring economic data for signals about consumption, which is under pressure because of the struggling economy.
As Brent fell, U.S. crude rose slightly, narrowing the international benchmarks premium to the U.S. marker, in part due to the start of an expansion of the Seaway pipeline next week.
The expanded line will help alleviate a glut of crude in the Midwest, including at the Cushing, Oklahoma, delivery point for the New York Mercantile Exchange's U.S. oil futures contract. Seaway will deliver the extra oil volumes to the Gulf Coast refining hub, helping to boost U.S. prices relative to Brent.
Brent February crude fell 83 cents to settle at $111.31 a barrel, above the 100-day moving average of $111.22.
U.S. crude turned firmly positive just ahead of the settlement after see-sawing throughout the day, lifted by gains in the stock market after a jobs report showed employers kept hiring steady in December.
U.S. February crude settled 17 cents higher at $93.09 a barrel after earlier dipping below the 200-day moving average of $91.76 when it hit a session low of $91.52.
"It's just hard for traders to stay short (U.S. crude) with the climbing equities market," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
Brent's price slide pushed its premium to U.S. crude to just over $18 a barrel, the narrowest since late September.
Trading volumes for both contracts were strong, with Brent crude volumes 30 percent over the 30-day moving average and U.S. crude volumes nearly 19 percent above that average in late Friday activity.
U.S. RBOB gasoline futures fell 1.3 percent in late trading.
The rise in gasoline and distillate inventories reported by the EIA beat consensus expectations by analysts and offset any bullish sentiment from an 11.1 million barrel slide in crude oil inventories last week. The draw in crude was tied to refiners slowing purchases for year-end tax purposes and analysts said stockpiles should recover next week as companies offload cargoes held offshore until the new year.
Oil prices were pressured overnight on signs that Federal Reserve officials are increasingly concerned about the central bank's $2.9 trillion balance sheet.
Equities markets also found support from data from the Institute for Supply Management showing U.S. service sector activity expanding the most in 10 months. (Reporting by Robert Gibbons and Matthew Robinson in New York, Peg Mackey in London and Florence Tan in Singapore; Editing by David Gregorio and Andre Grenon)