U.S. crude inventories fell by 1.8 million barrels in the last week as refineries hiked output, compared with analysts’ expectations for an decrease of 67,000 barrels. Crude stocks at the Cushing delivery hub rose by 1.995 million barrels, EIA said.

China’s official Purchasing Managers’ Index (PMI) slipped to 50.1 in December from November’s 50.3, a government study showed on Thursday, its lowest level of the year and clinging just above the 50-point level that separates growth from contraction on a monthly basis. Analysts polled by Reuters had forecast a reading of 50.1.

Libya has made more progress in extinguishing a fire at oil storage tanks at the country’s biggest oil port, Es Sider, that has been raging for one week, a member of a firefighting crew said on Thursday. A week ago, a rocket hit Es Sider’s storages, destroying up to 1.8 million barrels of crude and at least two tanks, a top official has said.

Read MoreSaudi Arabia doesn’t care about volatile oil

Falling world oil prices will hurt countries across the Middle East unless Saudi Arabia, the world’s biggest crude exporter, takes action to reverse the slump, Iran’s deputy foreign minister told Reuters, describing Saudi Arabia’s inaction in the face of a six-month slide in oil prices as a strategic mistake and said he still hoped the kingdom, Tehran’s main rival in the Gulf, would respond.

State oil giant Saudi Aramco has suspended plans to build a $ 2 billion clean fuels plant at its largest oil refinery in Ras Tanura, which appears to be one of the first suspended in Saudi Arabia in response to the halving of the oil price in the last six months.