U.S. crude settled about 1 percent lower on Thursday, but an apparent momentum towards a deal between Iran and world powers over its nuclear program and higher U.S. inventories offset supply shocks in the Middle East.
U.S. Secretary of State John Kerry said on Wednesday that a deal between Iran and the P5+1 group of countries would be harder to achieve after a Nov. 24 deadline, suggesting a degree of urgency ahead of planned talks in Oman next week.
"If sanctions on Iran are eased, one needs to review once again the supply and demand balance," said Olivier Jakob of Petromatrix, a Swiss energy consultancy.
Samuel Ciszuk, senior advisor on supply security at the Swedish Energy Agency, told the Reuters Global Oil Forum on Wednesday that he saw the odds of a deal or compromise being reached as "50-50".
U.S. crude futures for December delivery settled about 1 percent lower at $77.91 per barrel, down 77 cents on the day. Meanwhile, brent crude for was flat and slightly below $83 a barrel, after touching a high of $83.24 earlier.
U.S. crude inventories rose 460,000 barrels in the week to Oct. 31, Energy Information Administration data showed on Wednesday, albeit compared with analysts' expectations of an increase of 2.2 million barrels.
"U.S. domestic production is at its highest level ever, and imports are at their lowest for more than a decade - that's a bearish outlook in the short term," said Tamas Varga, analyst at PVM Oil in London.