Crude oil prices fell on Friday as rising U.S. fuel stocks and the prospect that the Federal Reserve could temper its economic stimulus program countered any support from falling U.S. crude stocks.
U.S. RBOB gasoline futures slumped nearly 5 cents and heating oil more than 2 cents after the Energy Information Administration's (EIA) weekly report showed gasoline stocks rose 2.57 million barrels and distillate stocks rose 4.57 million barrels last week.
The jumps in fuel inventories beat consensus expectations and offset any price boost that might be expected from a huge, 11.1 million barrel slide in crude oil inventories reported by the EIA, as year-end tax considerations led companies to allow inventories to plummet.
"People realize that the crude draw is a year-end tax thing and the big builds in (refined) products, especially the distillate, will ease concerns about those supplies," said Phil Flynn, analyst at Price Futures Group in Chicago.
Signs that Fed officials are increasingly concerned about the central bank's $2.9 trillion balance sheet boosted the dollar, adding pressure to crude in trading ahead of the EIA oil data.
The concerns about stimulus lingering after the release of the minutes of the Fed's December policy meeting overshadowed Friday's U.S. jobs report that showed employers kept a steady pace of hiring in December.
"After the Fed indications of concern about quantitative easing, the oil market may be back to a situation where good news is bad news, meaning this morning's good jobs number may cause the Fed to end stimulus sooner," said Flynn.
Brent February crude fell 83 cents to settle at $111.31 a barrel, above the 100-day moving average of $111.22.
U.S. crude turned firmly positive just ahead of the settlement after see-sawing throughout the day, lifted by gains in the stock market after a jobs report showed employers kept hiring steady in December.
U.S. crude settled 17 cents higher at $93.09 a barrel after earlier dipping below the 200-day moving average of $91.76 when it hit a session low of $91.52.
Brent's steeper price slide put pushed its premium to U.S.crude under $19 a barrel.
"A much firmer U.S. dollar and speculation about anearlier end to Fed bond purchasing are putting oil prices under pressure,"said a Commerzbank research note.