Oil prices eased Thursday in subdued trade owing to the US Thanksgiving holiday, and after a ceasefire ended a week of cross-border violence between Israel and Palestinian militants that killed at least 160 people.
The declines were limited however by strong Chinese manufacturing output data 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 slid 60 cents to $110.26 a barrel in London late afternoon deals.
New York's main contract, light sweet crude for January or West Texas Intermediate (WTI), eased 29 cents lower to stand at $87.09 per barrel in electronic deals.
"Crude oil prices are currently in a consolidation mode," said analyst Myrto Sokou at brokerage Sucden Financial Research.
"With the US markets closed for Thanksgiving, we expect thin trading conditions with low volume and fairly (high) volatility in today's trading session."
HSBC bank said 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 was the first reading above 50 since October 2011 and added 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 cautious market reaction to news of the Israel-Hamas ceasefire agreement amid renewed concern over Middle East oil supplies.
The ceasefire came into effect at 1900 GMT 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 Department of Energy (DoE) had revealed on Wednesday that the nation's crude supplies sank by 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's 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 the 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.