Oil prices dipped toward six-week lows Friday amid signs Western powers plan to release strategic crude reserves soon.
By early afternoon in Europe, benchmark oil for May delivery was up 56 cents to $103.34 a barrel in electronic trading on the New York Mercantile Exchange. The contract dived $2.63 to settle at $102.78 per barrel in New York on Thursday.
In London, Brent crude for May delivery was up 83 cents at $123.22 per barrel on the ICE Futures exchange.
French Prime Minister Francois Fillon said Thursday that there's a "good chance" that the U.S. and Europe will agree to release some of their oil reserves. Investors are mulling how much the additional supply would lower oil prices, which have jumped from $75 in October.
"A strategic stock release of some sort seems highly likely over the next few months," Barclays Capital said in a report. "A large part of a potential stock release is already being priced in and has been one of the key deterrents from prices moving higher."
Analyst Olivier Jakob of Petromatrix in Switzerland said that the countries seen pushing most for the release of reserves — the U.S., Britain and France — are the same ones leading sanctions against Iran and it would be in their interest "to have oil prices trending lower" before the expected start of talks with Iran about its disputed nuclear program on April 13.
"We can consider as a given that a release of strategic stocks is on its way," Jakob said. "There is no serious prompt supply disruption but the reason for the stock release is price management not supply management."
"We think that there is a risk for the announcement of the stock release to be made before April 12," Jakob concluded.
Adding fuel to the speculation about a release of reserves, the Paris-based International Energy Agency said oil prices were "very high" and that it was "concerned by the impact of these high prices while the global economic recovery remains fragile."
"The IEA was created to respond to serious physical supply disruptions, and we remain ready to act if market conditions so warrant," IEA Executive Director Maria van der Hoeven said Thursday.
Some analysts expect crude has peaked for the year as slower global economic growth undermines demand for oil.
Capital Economics expects Brent crude to fall to $95 by the end of the year and $85 in 2013.
"The global economic recovery is set to disappoint," Capital Economics said in a report. "Europe is facing a deep recession, which would only be made worse if oil prices stay elevated for much longer."
In other energy trading, heating oil was up 1.98 cents at $3.1896 per gallon and gasoline futures rose 1.83 cents at $3.3580 per gallon. Natural gas added 0.7 cents at $2.156 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.