Oil prices slid Thursday as traders appeared inclined to book profits from a rally the previous day amid concerns about slack energy demand amid the global economic downturn.
New York's main contract, light sweet crude for delivery in December sank 78 cents to close at 79.62 dollars a barrel.
In London, Brent North Sea crude for December delivery shed 90 cents to settle at 77.89 dollars.
Profit taking appeared to set in following the market's sharp rally Wednesday after the US government's weekly energy reserves report showed an unexpected drop in crude stockpiles, said Jason Schenker of Prestige Economics.
Schenker said it was "a surprising report which introduced a lot of volatility yesterday but doesn't fundamentally change the picture of very large crude inventories and near historically high distillates inventories."
He said weekly data had caught a number of traders "off guard."
Since the beginning of the week, the New York benchmark contract has advanced 3.40 dollars and has not finished above 80 dollars a barrel since October 26.
"Price has been rangebound for over a week," roughly between 77 and 81 dollars, said Schenker.
He said the market was "looking for a breakout but economic data is still mixed."
The US Federal Reserve on Wednesday held rock-bottom interest rates for "an extended period" and kept trillion-dollar stimulus measures in place to support a fragile recovery from recession.
As expected, the Fed held its key federal funds rate at a historic low of zero to 0.25 percent, where it has been since last December to help pull the economy out of the worst downturn since the Great Depression.
On Thursday, both the Bank of England and the European Central Bank held their key lending rates at record-low levels.
"The Fed is not pointing at any strong demand recovery and the US oil statistics are saying the same thing," said Petromatrix oil market analyst Olivier Jakob.
"US demand for petroleum products has been very stable for the last five month and while stability is better than continued erosion it is not yet showing any sign of rebound," he warned.
Prices eased Thursday after briefly breaching the 81-dollar mark in New York on Wednesday, reflecting concerns over demand, analysts said.
"The fundamentals of the markets are still weak... and there are no signs of steadily growing demand," said Jason Feer, Asia-Pacific vice-president of energy market analysts Argus Media in Singapore.
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