LONDON - Oil prices steadied on Thursday as some traders took profits from bumper gains the previous day when the market had spiked higher after Iran warned it could slash exports to six EU nations.
Brent North Sea crude for April delivery firmed five cents to $118.98 per barrel in midday London deals, having soared on Wednesday to $119.99 -- the highest level since early August 2011.
New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in March, fell 52 cents to $101.28.
Traders capitalised on Wednesday's surge in prices, said senior commodities strategist for ANZ Research Nick Trevethan.
"It's just a little bit of selling into strength," he told AFP.
"The way I see it is there seems to be a bit of resistance at the $102 level for the WTI and for Brent around $119," he added.
Prices jumped by more than one percent in late US trade Wednesday, with WTI closing 20 cents shy of $102 and Brent finishing at $118.93.
"Brent yesterday climbed briefly to a six-month high on the back of Iranian media reports claiming that Iran has imposed an immediate ban on oil shipments to six EU countries, including Italy, Spain and Greece -- all major consumers of Iranian oil," said Commerzbank analyst Carsten Fritsch.
"Although these reports were denied a short time later by the Iranian oil ministry, they are no doubt part of the verbal sabre-rattling which for some time now has been Iran's response to the growing pressure and sanctions of the West," Fritsch said.
"Given Iran's dependence on its oil revenues and the latest reports of its payment difficulties, an immediate ban on shipments is not overly credible."
Iran said Wednesday that it was considering cutting oil sales to six EU countries but would not do so "at the moment," while unperturbed European officials said they were looking for other suppliers anyway. State broadcaster IRIB reported on its website that the ambassadors of France, Greece, Italy, the Netherlands, Portugal and Spain were called to the foreign ministry in Tehran and warned that "Iran will revise its oil sale to these countries."
The warning was in retaliation of a European Union ban on Iranian oil imports that is being phased in as existing contracts expire up to July 1.
The EU, the United States and their allies suspect Tehran is developing nuclear weapons; Tehran insists its programme is purely for peaceful purposes.
The European Commission said that, even if Iran did cut its sales to the EU, it would make little difference as EU buyers were already switching suppliers.
In another development, the Islamic republic also unveiled what it described as major progress in its controversial nuclear programme on Wednesday.
Iran's President Mahmoud Ahmadinejad, wearing a white coat, oversaw what was described on state television as the insertion of Iran's first domestically produced, 20-percent enriched fuel rods into Tehran's research reactor.
Oil prices also found support after the US crude stockpiles fell by 200,000 barrels in the week ending February 10, indicating strengthening demand in the world's biggest crude consumer.
Market expectations had been for a gain of 1.3 million barrels, according to analysts polled by Dow Jones Newswires.
Trevethan added on Thursday that the oil market remains well-supported by "a lot of very strong fundamentally supportive drivers."
Iranian threats to cut crude exports, a pipeline explosion in Syria, a strike in Yemen's biggest oil field and a dispute between Sudan and South Sudan were all supporting prices, he noted.