Traders were also cautious ahead of the European Central Bank’s policy meeting later in the day as well as Friday’s U.S. nonfarm payrolls data.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD101.10 a barrel during European morning trade, down 0.1% on the day.
New York-traded oil prices held in a range between USD101.00 a barrel, the daily low and a session high of USD101.48.
Trade volumes were expected to remain light on Thursday, with markets in the U.S. closed for the Independence Day holiday.
Oil prices rallied to USD102.15 a barrel on Wednesday, the strongest level since May 4, 2012, on concerns that political unrest in Egypt would spread to major oil-producing countries in the Middle East.
President Mohammed Morsi was ousted from power Wednesday in what various media outlets reports as a military coup.
Oil prices received an additional boost after a report from the U.S. government on Wednesday showed that oil supplies fell significantly more-than-expected last week.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 10.3 million barrels in the week ended June 28, compared to expectations for a decline of 2.3 million barrels.
Oil traders now looked ahead to Friday’s highly-anticipated U.S. nonfarm payrolls data for indications of how the recovery in the U.S. labor market is progressing.
Data on Wednesday showed that the U.S. private sector added 188,000 jobs in June, more than expectations for an increase of 160,000.
Any improvement in the U.S. economy was likely to reinforce the view that the Federal Reserve will begin to taper its bond purchase program in the coming months.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery shed 0.3% to trade at USD105.36 a barrel, with the spread between the Brent and crude contracts standing at USD4.26 a barrel.
The gap between the contracts narrowed to the smallest level since December 2010 earlier in the week, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures.