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Light, sweet crude for February delivery was down 35 cents to $98.83 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.
On Thursday, the contract rose as high as $100.09 a barrel, a trading record, before retreating to settle at $99.18, down 44 cents.
In London, Brent crude fell 22 cents Friday to $97.38 a barrel on the ICE Futures exchange.
Prices have been volatile in recent days due to low holiday week trading volumes. That means some of the price moves, including Thursday's record, may be exaggerated.
The U.S. Energy Department's Energy Information Administration said Thursday that crude inventories fell 4 million barrels last week, much more than the 1.7 million barrel decline analysts surveyed by Dow Jones Newswires had expected.
The large decline wasn't able to keep oil prices above $100 "likely because the inventory drawdown was at least in part attributed to year-end inventory management by American oil companies," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Others said the market would remain bullish as long as demand continued to outpace production.
"Demand is higher than supply, and is likely to remain higher until something dramatic changes," said Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, in a research note.
He mentioned a U.S. recession, changes in consumer behavior and the discovery of new oil fields as possible
-- but unlikely -- factors which could dampen demand.
"The conservation effort has been notably quiet as prices have risen. Will $100 crude oil headlines spur consumers to react? If this doesn't do it, nothing will," Beutel said.
Investors moving funds into commodities also was seen backing oil prices.
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 "We continue to view the current support in the oil markets as part of the asset reallocation for 2008, shifting more weight into commodities," said Olivier Jakob of Petromatrix in Switzerland.
Crude's move to $100 a barrel prompted Indonesian officials to announce plans to ask OPEC to boost output to bring down oil prices, Dow Jones reported. While that may be tempting to some Organization of Petroleum Exporting Countries members, many analysts think high prices will themselves do the trick by cutting demand.
"By the time OPEC meets on Feb. 1, crude oil prices will have softened because the peak winter season demand in the northern hemisphere will be over and typically in the second quarter, pricing is weak so there will be less pressure on OPEC to raise output," Shum said.
The EIA also said in its weekly report that inventories of distillates, which include heating oil and diesel fuel, rose 600,000 barrels, countering analyst expectations that distillate supplies would fall 600,000 barrels. Supplies of gasoline rose 1.9 million barrels, more than the 1.3 million barrel increase analysts had expected.
Crude supplies at the closely watched Nymex delivery terminal in Cushing, Okla., were unchanged last week at 17.5 million barrels. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.
Refinery activity rose by 1.3 percent last week to 89.4 percent of capacity. Analysts had expected refinery use to increase by 0.4 percentage point.
Heating oil futures fell 0.31 cent to $2.7160 a gallon (3.8 liters) while gasoline prices slipped 1.6 cents to $2.5254 a gallon.
Natural gas futures gained 1.3 cents to $7.687 per 1,000 cubic feet.
[Associated Press; By PABLO GORONDI]
Associated Press writer Gillian Wong in Singapore contributed to this report.
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