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 Sustained cold weather has driven demand for heating oil higher in
recent weeks, supporting crude oil prices. Weekly data from the U.S.
Energy Information Agency, however, showed stockpiles of
distillates, including heating oil, fell by just 339,000 barrels
last week. Analysts anticipated a 2 million barrel draw.
Also weighing on oil was data from China that showed manufacturing
activity shrank in February to the lowest in seven months and
employment fell at the fastest pace in five years.
Losses were muted, however. Crude stocks at the Cushing hub in
Oklahoma fell by 1.73 million barrels as a new pipeline drained
supplies from Cushing, the WTI contract's delivery point, to the
Gulf Coast, which supported prices.
Positive U.S. manufacturing activity in February and a drop in
unemployment benefits also lent some support.
"(The EIA data) was not enough to spark new buying after the big run
up we've had and the China data was bearish," said Phil Flynn, an
analyst at Price Futures Group in Chicago.
Brent settled 17 cents lower at $110.30 a barrel (1749 GMT) after
settling at its highest price of 2014 on Wednesday.
U.S. crude oil for March delivery, which expired Thursday, settled
39 cents lower at $102.92. U.S. crude for April delivery, which will
become the front month contract on Friday, settled 9 cents lower at
$102.75.
April Brent's premium to U.S. crude <CL-LCO1=R> settled 8 cents
lower at $7.55, after it narrowed to $7.09 earlier in the session,
its tightest point since Oct. 9.
U.S. ultra-low sulfur diesel (ULSD), commonly known as heating oil,
rose about 3 cents to $3.1777.
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GLOBAL SUPPLY CONCERNS
Political risks in Africa and Venezuela partly offset the negative
impact on oil from the China survey. Domestic unrest has cut crude
output in Libya and South Sudan, and dealers are keeping a watchful
eye on protests in Venezuela.
Traders eyed the turmoil in Ukraine, where violence escalated
sharply on Thursday, as diplomatic efforts from the European Union
or Russia may hold implications for the states' political relations.
Russia is the third largest oil producer in the world, and a major
supplier to Europe.
Investors are also tracking Iran's nuclear talks.
Six world powers and Iran made a "good start" during talks in Vienna
towards reaching a final settlement to the decade-old standoff over
Tehran's nuclear program, an EU official said.
A final resolution could lead to a full lifting of sanctions that
have curbed oil exports from the OPEC producer.
(Additional reporting by Florence Tan
in Singapore; editing by David Evans, Dale Hudson, Peter Galloway
and Andrew Hay)
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