Brent crude fell towards $112 a barrel on Thursday after oil facilities in the Gulf of Mexico were largely spared storm damage, but maintenance at North Sea fields and a possible strike in Norway's oil sector curbed losses.
U.S. crude futures posted a bigger fall as a surprise build in crude stockpiles and a possible release of strategic oil stocks weighed on prices.
Hurricane Isaac was downgraded to a tropical storm on Wednesday as it continued to batter the U.S. Gulf Coast, causing flooding and power outages but so far no discernible damage to refineries or offshore oil and gas platforms.
Brent crude for October delivery edged down 5 cents to $112.49 a barrel and U.S. crude slipped 52 cents to $94.97 by 0431 GMT. Both contracts were down for a second straight session.
"We don't see any substantial impact from this hurricane so the risk premium has been removed," said Yusuke Seta, a commodities sales manager at Newedge Japan.
U.S. crude oil inventories rose 3.78 million barrels in the week to August 24, the Energy Information Administration said on Wednesday, against expectations of a 1.5 million-barrel fall.
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Talks that consuming nations may release strategic oil reserves have also capped oil prices.
The White House reiterated on Wednesday that the option of releasing oil from the Strategic Petroleum Reserve remained on the table but it had no announcements to make.
Just a day earlier, the Group of Seven finance ministers expressed concerns over high oil prices and said they stood ready to call on the International Energy Agency to ensure the market is well supplied.
EYES ON BERNANKE, ECB
Investors stayed on the sidelines, waiting for a speech by U.S. Federal Reserve Chairman Ben Bernanke on Friday for signs of further economic stimulus. They are also eyeing more details from the European Central Bank on proposed bond purchases aimed at tackling the region's debt crisis.
"If they are going to announce concrete ideas to support those countries in the euro zone it will be supportive for the euro and Brent crude," Newedge's Seta said, adding Brent will see support at $111.50 a barrel, the 200-day moving average.
More bond purchases by the United States could depress the U.S. dollar, making commodities such as oil more affordable for buyers holding other currencies.
Oil investors are also keeping an eye on a possible strike by Norway's oil service workers that could disrupt supply from the world's eighth largest exporter.
This could be the workers' second strike in just over a month after they caused a partial shutdown of the country's oil and gas industry.
Tensions in the Middle East are also supporting oil prices.
"The likelihood of a scenario that involves military action by Israel is low ahead of U.S. presidential elections, but the question is what happens afterwards," BNP Paribas analysts wrote in a note.
"As Iran loses its position as OPEC's second largest producer to Iraq, it is hard to envisage that it will sit quietly as more of its oil comes under embargo."
(Editing by Miral Fahmy and Richard Pullin)