Brent oil drops

Brent crude oil futures dropped back in Wednesday's session as a weak demand outlook from the International Energy Agency overshadowed hopes that the International Monetary Fund would be able to raise more money to help resolve Europe's debt crisis.
US crude futures retreated, after being up earlier, on news that the Obama administration was poised to reject TransCanada's $7 billion crude oil pipeline project, analysts said.
"NYMEX crude pulled back on that news, but US crude futures have also fallen as it is testing support around $100, after rising on concerns about disruption of supply from Iran," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut. Analysts said that while that news spurred some selling, reports later in the day that TransCanada could still reapply later on helped bring back some buying, limiting the day's losses on US crude futures.
US crude futures had gained earlier as gasoline futures jumped to a three-month high on news the 350,000 barrels per day Hovensa LLC refinery in St. Croix, US Virgin Islands, would be shut mid-February due to heavy losses caused by low refinery margins. In London, ICE Brent crude for March delivery was down 87 cents at $110.68 a barrel by 2:35 pm EST (1935 GMT), after touching a session high of $112.20.
US crude for February delivery settled at $100.59, edging down 12 cents, after rising to a session high of $102.06. February RBOB gasoline ended up 5.41 cents at $2.8254 a gallon, after surging 2.94 percent to a session peak of $2.8529, the highest intraday since October 17.
Brent crude's total trading volume rose 21 percent against the 30-day average, according to Reuters data. US crude total volume increased 20 percent from the 30-day average. Oil futures and other riskier assets gained in early trade after reports said the IMF is proposing to increase its lending pool by up to $600 billion to lend to nations battling with the fallout from the euro zone debt crisis.
But this was overshadowed by a report from the Paris-based International Energy Agency, which cut its 2012 demand growth forecast by 220,000 barrels per day (bpd) from its previous monthly report, to 1.1 million bpd. IEA, the energy policy adviser to 28 industrialised nations, said oil demand is falling for the first time since the global economic crisis of 2008-2009, as demand in the last quarter of 2011 fell 300,000 bpd to 89.5 million bpd.
It cited mild winter weather, the European debt crisis and high oil prices for the fourth quarter demand drop. Forecasts that US crude inventories increased last week also kept traders cautious. A Reuters poll forecast that domestic crude inventories rose 2.8 million barrels in the week to January 13.
The American Petroleum Institute will issue its inventory report at 4:30 pm EST (2130 GMT), followed by the US Energy Information Agency on Thursday at 11 am EST (1600 GMT). Concerns about the euro zone debt crisis persisted as markets awaited results of a meeting between international creditors and the Greek government on bond swap deal.