Oil hovered below $71 a barrel on Thursday, after falling more than 2 percent in the previous session following U.S. government inventory data highlighting the weak state of demand? in the world's top energy consumer.

U.S. crude for January delivery was steady, after losing almost $2 in its sixth straight day of losses on Wednesday, when it hit the lowest since early October at $70.13.

London Brent crude gained ($72.68, up $0.29).

Oil prices dropped on Wednesday after U.S. Energy Information Administration data showed builds in U.S. refined product stockpiles, although there was a surprise draw in crude inventories.

"I think today we are seeing a pause after the previous days sharp losses," Carsten Fritsch, oil analyst at Commerzbank in Frankfurt said on Thursday. "The $70 level is holding for now but I think there is more downside potential further forward."

There were further signs that global oil supplies were rising on Thursday as Saudi Arabia restored full term crude allocations to at least two Asian buyers for January and keeping contracted volumes to six others, according to industry sources.

Brent Premium

The spread between front-month Brent and U.S. crude oil futures widened to around $2 a barrel on Thursday, stretched by the build in stocks at Cushing, Oklahoma, the delivery point for U.S. crude oil futures.

"Despite the drop in overall crude stocks, inventories at Cushing are approaching the record high in February, widening the spread between Brent and WTI (U.S. crude)," Fritsch said.

The EIA data on Wednesday showed crude stockpiles at Cushing were up last week by 2.5 million barrels at 33.4 million barrels, near the 35 million-barrel peak hit in February.

Saudi Arabia's move to restore full term crude supply to two Asian buyers, comes ahead of OPEC's Dec. 22 meeting, at which most members have said they would not raise production targets.

Ecuador's energy minister on Wednesday said he expected OPEC to leave oil output targets unchanged when the group meets later this month, setting the stage for prices to remain between $70 and $80 per barrel.