U.S. crude settled down 75 cents at $63.22 a barrel after touching a five-month low of $63.00 in intraday activity. Thursday's losses came after a 21-cent rise on Wednesday snapped a seven-session slide that lopped 12 percent off prices, the longest losing streak in three years.
London Brent was down 75 cents at $62.24, off more than a $16 from its August 8 record high and the steepest retreat since the 1991 Gulf War.
U.S. inventory data released this week showed builds in natural gas and distillate stocks, including heating oil, increasing the world's top energy consumer's supply cushion ahead of the northern winter.
"The bearish (natgas) number basically just piled on to the bearish news throughout the energy complex, following up on the huge distillate build report in yesterday's oil stats," said Katherine Spector of J.P. Morgan.
Natural gas prices fell below $5 per million British thermal units for the first time in two years.
Markets were also soothed when tanker loadings resumed at Nigeria's Brass export terminal overnight after a brief break due to a strike by oil unions, ship agents said on Thursday.
A three-day strike over insecurity in the Niger Delta began on Wednesday, but oil unions suspended the strike on Thursday.
The U.S. Department of Transportation on Thursday said it was reviewing a request by BP Plc to restart production at the eastern section of its Prudhoe Bay oil field in Alaska.
BP shut the field, the largest in the United States, in August due to severe pipeline corrosion. The oil major has restarted some production, but needs to resume output from the east to test and repair pipelines.
Underlining the view that supplies were robust, a spate of refinery run cuts across Asia deepened on Thursday.
Oil dealers were debating whether the price gains were a short-term bounce or a resumption of a four-year rally fueled by robust economic growth.
The International Monetary Fund said on Thursday the economic outlook was even stronger for next year. In its twice-yearly World Economic Outlook, the IMF raised its 2007 global growth forecast to 4.9 percent from 4.7 percent.
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