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Brent futures for August settlement were down 13 cents to $85.58
a barrel by 0927 GMT, while U.S. West Texas Intermediate crude
futures for August delivery were down 10 cents to $81.19.
Prices have risen about 5% this month to their highest in more
than seven weeks.
"The seasonal demand increase, as shown by the latest EIA data,
renewed confrontation between Israel and Hezbollah, and the
hurricane season could sustain price strength into the summer,"
Citi analysts said in a note.
U.S. government data released on Thursday showed total product
supplied, a proxy for the country's oil demand, rose by 1.9
million barrels per day (bpd) in the week ending June 14 to 21.1
million bpd.
The data from the Energy Information Administration (EIA) showed
a drawdown in U.S. crude stockpiles by 2.5 million barrels rose
during the week to 457.1 million barrels, compared with
analysts' expectations for a fall of 2.2 million.
Gasoline inventories fell by 2.3 million barrels to 231.2
million barrels, the EIA said, compared with forecasts for a
600,000-barrel build.
Demand prospects elsewhere also helped push prices higher.
"Signs of stronger demand in Asia also boosted sentiment. Oil
refineries across the region are bringing back some idled
capacity after maintenance," analysts at ANZ Research said.
The head of Lebanon's Hezbollah this week pledged a full-on
conflict with Israel in the event of a cross-border war and also
threatened EU member Cyprus for the first time.
Weighing on prices were U.S. data released on Thursday that
showed a decline in new unemployment claims, which may lead the
Federal Reserve to keep interest rates unchanged. Higher
interest rates typically limit economic growth and, in turn, oil
demand.
(Additional reporting by Laila Kearney in New York and Sudarshan
Varadhan in Singapore; editing by Christian Schmollinger and
Jason Neely)
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