U.S. crude oil slipped by midday trading in New York on Thursday as gasoline pulled back on news of refineries in Texas restarting and curbing supply worries, traders told Reuters.
Light, sweet crude's retreat stemmed a rally that came close to an 11-month high on fund-led buying amid strengthening of Brent crude above $77.
U.S. light, sweet crude (delayed) was down.
London Brent crude (delayed) eased back, after rising to $77.07 a barrel, its highest since Aug. 10 last year. Brent was within striking distance of its record high of $78.65 set on Aug. 8 last year.
Investors and analysts have cited speculative buying by hedge funds and pension funds as one key factor behind the latest oil rally.
"This (recent) rally is very much fund driven... The entry of long-only hedge funds into the market is a major factor this time around. We wouldn't rule out Brent hitting $80 this summer," said Graham Sharp, director and one of the funding partners at commodities trading group Trafigura.
Tighter supplies of oil from the North Sea over the summer due to oilfield maintenance has helped Brent advance towards its all-time record.
The unexpected closure of a North Sea gas pipeline this month has cut oil output from at least one group of fields, operator ConocoPhillips said.
Chevron said the closure, which could last several more weeks, was impacting production from its Erskine oilfield.
Investment bank Goldman Sachs said the strong price rally in recent weeks was "firmly grounded in near and longer-term fundamentals."
"These tightening fundamentals have led investor length across the hydrocarbon complex to exceed the high levels reached last year, but with much more sustainable drivers."
Strong Demand
Traders are awaiting the International Energy Agency's monthly report on Friday, expected to give the latest snapshot of global oil demand and stockpiles.
The agency's medium-term oil market report released earlier this week warned that oil demand would rise faster than expected over the next five years while production lags.
U.S. Energy Information Administration data on Wednesday showed a 1.2 million-barrel increase in gasoline inventories there in the week ended July 6, just above analysts' forecasts for a 900,000 barrel-build.
But gasoline stockpiles remained 8.2 million barrels lower than a year ago, while the peak demand season is expected to last at least more than a month.
U.S. refiners have struggled with unexpected outages this year that drained gasoline stockpiles ahead of the summer driving season, when demand for the motor fuel peaks.
Demand for gasoline over the past four weeks was up 1.4% against year-ago levels, while total fuel demand over the past four weeks was flat versus the same period last year.
Crude stockpiles in the world's top energy consumer fell 1.4 million barrels last week, compared to an expected rise of 100,000 barrels.
Saudi Arabian oil minister Ali al-Naimi said the tightness in supply of oil products such as gasoline and international political tensions were pushing prices higher.
His view was echoed by other members of the Organization of the Petroleum Exporting Countries, who said they were ready to pump more crude, but saw no need to do so now, rebuffing calls from consumer nations for extra oil to lower prices that reached 11-month highs this week.