Brent crude oil futures climbed back in late trading to end almost 1 percent higher on Thursday on an easing of worries over the euro zone debt crisis and signs of steadier global economic growth.
U.S. oil closed lower, however, as data showing a 3.4-million-barrel drop in domestic crude stockpiles last week after three weeks of increases left supplies still ample, analysts said.
Weak demand, particularly for gasoline, hampered a late recovery in U.S. crude. Gasoline inventories jumped by 3.7 million barrels last week, rising for a third week in a row, the U.S. Energy Information Administration said.
U.S. gasoline demand plummeted by 183,000 barrels per day to just under 8 million bpd in the week to Jan. 13, the lowest level in more than a decade, as high pump prices limited road travel.
In London, ICE Brent for March delivery settled at $111.55 a barrel, gaining 89 cents and moving back near an early high of $111.75. It regained much of its Wednesday losses.
U.S. February crude, which expires on Friday, settled lower for a second straight day, posting a 20-cent loss at $100.39. It hit the day's high at $102.06 early.
March Brent's premium against its counterpart U.S. crude contract widened to $11.01 at the close, from $10.61 on Wednesday. <ID:CL-LCO1=R>
U.S. crude matched its Wednesday high but "there is no fresh buying, so there is strong resistance and it also reflects weak product fundamentals", said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Trading volumes slipped from their Wednesday levels with Brent turnover down 7 percent from the 30-day average. U.S. crude volume was up 17 percent from the 30-day average.
Oil prices rose in early trade as euro zone worries eased and Iran warned its Arab neighbors not to align closely with the United States in the rising tensions over Tehran's nuclear program.
Good demand for European government bonds, exemplified by a solid Spanish debt auction, also partly eased concerns about a potential Greek debt default.
U.S. economic data showed that new jobless benefit claims dropped to a near four-year low last week and Mid-Atlantic factory activity ticked up, though not as strongly as expected.
Iran's foreign minister warned Arab neighbors not to put themselves in a "dangerous position" in the dispute over Iran's nuclear activity.
Iran has threatened to close the key Strait of Hormuz oil-shipping route due to growing international censure for its nuclear ambitions.
European Union ambassadors on Thursday failed to agree on details of a planned embargo on imports of Iranian oil, but said their governments still sought to finalize the ban at a meeting on Monday.
IMF HOPES, ASIAN OUTLOOK
News on Wednesday that the International Monetary Fund was seeking to more than double its lending pool by raising $600 billion in new funds remained supportive toward resolving the debt crisis, analysts said.
Expectations for a steadier course in Asian economies also augured well for oil prices, they said.
A Reuters poll of more than 250 economists across Asia suggested that Asian economic growth, though slowing in key economies such as China and India, faced no sharp downturn.
The data implies that energy demand across big emerging economies will keep rising, absorbing supplies from the Middle East and elsewhere and keeping oil markets relatively tight at a time of tension between Iran and the West.
(Additional reporting by Robert Gibbons in New York; Christoper Johnson in London; Editing by David Gregorio and Dale Hudson)