Brent North Sea crude for February delivery was down 84 cents to $78.46.
Signs of weaker US energy demand emerged after the American Petroleum Institute (API) reported yesterday crude stocks in the country rose 1.206 million barrels.
Gasoline reserves increased by over six million barrels in the past week, it said, with distillate stocks including heating oil up 3.6 million barrels.
"The distillates showed a build of 3.6 million barrels which is a lot more than people expected," said Clarence Chu, an oil trader with Hudson Capital Energy in Singapore.
The API figures come ahead of a key weekly US Department of Energy due later today which is widely monitored for clues on demand in the world's largest energy user.
Analysts polled by Dow Jones Newswires expect the DoE report to show a one-million barrel increase in crude stocks in the past week and gasoline reserves to also increase by the same margin.
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