World oil prices steadied on Thursday after a ceasefire ended a week of cross-border violence between Israel and Palestinian militants that left at least 160 people dead.
The market gained support from strong Chinese manufacturing output and news of a surprise slump in US energy reserves, which indicated firm oil demand in the world's two biggest economies, traders said.
Brent North Sea crude for delivery in January eased 35 cents to stand at $110.51 a barrel in London midday deals.
New York's main contract, light sweet crude for January or West Texas Intermediate (WTI), gained just one cent to $87.39 a barrel.
“Crude oil prices are currently on a consolidation mode,” said Sucden brokers analyst Myrto Sokou.
“With the US markets closed for Thanksgiving, we expect thin trading conditions with low volume and fairly volatility in today's trading session.”
HSBC bank said on Thursday that China's manufacturing activity grew for the first time in more than a year in November, reinforcing recent views that the economy is beginning to pick up after several months of slowdown.
The bank's purchasing managers' index (PMI) stood at 50.4 this month, compared with 49.5 in October. Anything above 50 points to growth and anything below indicates contraction.
It is the first reading above 50 since October 2011 and adds to a slew of upbeat trade, investment and sales figures released this month and last that have fuelled optimism. China is the world's biggest consumer of energy.
Crude futures had risen on Wednesday, lifted by falling US supplies, and as the market reacted cautiously to news of the Israel-Hamas ceasefire agreement amid renewed concerns over Middle East oil supplies.
The ceasefire came into effect at 21:00 SA time on Wednesday and halted eight days of conflict.
“A truce... eased concerns that a week of intensive Israeli fire on the Gaza Strip and militant rocket attacks out of the enclave could widen, engulfing regional oil exporters,” Phillip Futures said in a report.
The US government's Department of Energy (DoE) meanwhile on Wednesday revealed that the nation's crude supplies sank 1.5
million barrels in the week ending November 16.
That confounded expectations for a gain of 800,000 barrels, according to analysts polled by Dow Jones Newswires.
Gasoline or petrol stockpiles also unexpectedly fell by 1.5 million barrels last week.
The DoE added that distillates, which include heating fuel - a closely watched fuel as the northern hemisphere winter approaches - dropped by 2.7 million barrels. That was four times more than forecast.
Strong jobs data in the United States also bolstered oil market sentiment, analysts said.
Despite a disclaimer that numbers were distorted by the effects of Superstorm Sandy, traders still found cheer when official figures showed US jobless claims falling to 410,000 last week.
That marked a nine percent decline from the previous week's upwardly revised number of 451,000. Analysts on average had estimated claims in the world's largest economy would drop to 423,000. - Sapa-AFP