Rising US crude reserves hit oil prices

New York's main contract, West Texas Intermediate crude for delivery in February, dropped $1.37 to finish the session at $100.87 a barrel.

In London, Brent North Sea crude for February settled at $112.24 a barrel, a drop of $1.04 from Tuesday's closing level.

The US Department of Energy said that crude stockpiles jumped by five million barrels last week in the world's biggest oil consumer -- five times the amount forecast by analysts.

The build in US crude inventories was "doubtless encouraged by the threat of supply disruptions in Iran and the Strait of Hormuz," Nic Brown at Natixis said.

The eurozone debt crisis produced more worrying signs of distress, this time in Germany, Europe's biggest economy.

While the German economy grew a robust 3.0 per cent in 2011, according to the official statistics agency Destatis, most of the growth in gross domestic product came in the first half of the year.

German GDP probably shrank by about a quarter of a percentage point in the final quarter, Destatis official Norbert Raeth told a news conference.

Ahead of the US petroleum inventories data, prices were mixed as traders continued to track events in Iran amid fears that the Islamic republic could decide to halt its oil exports to the West.

The car-bomb killing of an Iranian nuclear scientist Wednesday further ratcheted up tensions that helped to underpin oil prices.

Tehran blamed the United States and Israel for the attack. Washington denied the claim, while a senior Israeli official said he was unaware of who did it.

"This news gave oil a boost where already Iran is looking to try to hang onto their customers and ensure customer loyalty," said Phil Flynn at PFG Best.

Traders were also closely following mounting unrest in Nigeria, which is another major crude oil producer and exporter.

Tens of thousands of protesting Nigerians defied an order to end a three-day-old strike Wednesday as unions threatened oil production and a mob rampaged in one city, leaving a police officer dead.

The strike and protests over soaring fuel prices sank Africa's largest crude producer and most populous nation further into crisis, with deadly religious violence having sparked talk of a looming civil war.