Analysts said traders would be watching closely a meeting next week by the US Federal Reserve for more clues about its plans to wind down its massive stimulus for the world's largest economy.

New York's main contract, West Texas Intermediate for March delivery, was down 21 cents at $96.52 a barrel in the afternoon after rising by $1.76 in closing US trade Wednesday.

Brent crude for March dipped 21 cents to $108.06 after gaining $1.54.

The International Energy Agency in its monthly report projected demand for crude would grow 1.3 million barrels per day in 2014, up from a previously forecast increase of 1.2 million. It said consumption accelerated at the end of 2013 as advanced economies, led by the United States, saw growth pick up.

That came as the International Monetary Fund raised its global growth forecast for the first time in nearly two years -- predicting 3.7 percent expansion in 2014, up from its earlier 3.6 percent estimate. It grew three percent last year.

The optimistic outlook was fuelled by a solid recovery in the United States while other countries move away from austerity measures.

Eyes are now on the US Federal Reserve, which last month said it would cut its bond-buying scheme by $10 billion a month to $75 billion as of January.

"Markets will be watching for outcomes from the Fed meeting next week, particularly if bond purchases are to be reduced," Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at consultancy firm Ernst & Young, told AFP.

David Lennox, resource analyst at Fat Prophets in Sydney, said tapering is a sign of a stronger US economy, which should be good news for the rest of the world.

"The fact that they are perhaps considering further tapering may indicate that the US is growing stronger," Lennox told AFP. "In turn, the move may start giving the market confidence," he added.