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Oil prices eased on Thursday after a seesaw session as dealers weighed tight US crude inventories against the threat of an economic slowdown slashing global energy-demand growth next year.
US crude settled 18 cents lower at US$91.06 a barrel after trading between US$90.57 and US$92.25, while Brent crude fell US60c to US$90.88.
"There was choppy trading due to light pre-holiday volume and the ongoing competing views about whether a tight supply picture or threats to economic growth are the most compelling," said Mike Fitzpatrick, vice-president at MF Global.
Oil prices soared to a record near-US$100 a barrel last month on fears of a winter supply crunch, but have since retreated amid growing signs that a credit crisis is undermining the US economy.
A Government report on Wednesday showed US crude stockpiles fell to their lowest level in nearly three years.
But the slide in stockpiles could be reversed in coming weeks as foul weather that had disrupted shipping on the Gulf Coast lifts, experts said.
"For now, price reaction to yesterday's big crude stock draw is being tempered by a perception that supplies will rebound next week," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
US crude stocks have fallen about 16 per cent since late June and are about 9 per cent below a year ago, pressured in part by Opec output restraints, according to the US Energy Information Administration.
Dealers said the impact of the thinning inventory levels has been muted by fears that economic turmoil in the United States could hamper growth in demand for fuel.
The US Energy Information Administration, the International Energy Agency and Opec have all slashed their projections for world energy demand growth in 2008, citing the threat of an economic slowdown.
- Reuters
