Oil prices dipped on Thursday after the European Central Bank left interest rates unchanged, disappointing traders after the UK central bank's vote for a second round of money creation had raised hopes of further support.
Brent crude futures for November were down 29 cents at $102.44 by 1216 GMT, compared with a gain of 3 percent on Wednesday. U.S. crude, which jumped more than 5 percent on Wednesday, was up 34 cents at $80.02 a barrel, helped by Wednesday's bullish crude inventories data.
Brent sold off as the market struggled to digest the ECB's decision, which came hard on the heels of a supportive move by the Bank of England.
The UK central bank voted to buy 75 billion pounds more in assets to shield Britain's economy from the euro zone debt crisis and keep the faltering recovery going.
But the European Central Bank held interest rates at 1.5 percent as a jump in inflation last month offset pressure to respond to the euro zone's worsening debt crisis by easing borrowing costs.
This disappointed those traders who had hoped for a modest cut in rates, the euro hit a session low against the dollar, and oil came under pressure as the dollar strengthened .DXY.
European share prices markets/index?symbol=gb%21FTPP>.FTEU3 and gold also trimmed gains after the decision.
Oil prices had been up around $1 earlier in the session, buoyed by proposals from European Commission President Jose Manuel Barroso for a coordinated recapitalization of banks to restore confidence.
But euro zone gloom continues to cast a long shadow, with U.S. Treasury Secretary Timothy Geithner saying that the EU crisis presented a significant risk to global economic recovery.
The downside in the oil price remains limited however, as hopes of an early return of Libyan supplies to global markets after months of war have faded. Italian oil major Eni (ENI.MI) said it feared its largest oilfield in the North African nation might be in ruins.
Also supportive are data showing U.S. crude and gasoline inventories fell last week instead of rising as forecast, while distillates stocks dropped more than expected.
U.S. initial jobless claims later on Thursday will be the next clue to how the world's largest economy is doing. The market will also focus on non-farm payrolls data due on Friday.
Brent faces resistance at $103.24 per barrel, a break above which will trigger a further rebound toward $105.79, said Reuters market analyst Wang Tao.