US light crude for February slipped 14 cents to $60.18 a barrel yesterday, after gaining over $2 in the previous two trading days. London Brent crude was 15 cents down at $57.92 a barrel.

The market was boosted by US government data on Thursday that showed a larger-than-expected 900,000 barrel drop in US distillate inventories, including heating oil, and a surprise 1.2 million fall in gasoline stocks last week.

Fuel supplies in the world's largest oil consumer fell as demand held firm and foreign shipments slipped, the US Energy Information Administration said in its weekly report.

Gasoline stocks are now 13 million barrels or nearly 7 percent below last year's level, raising concerns over low levels at a time when refiners normally build inventories ahead of peak summer demand in the northern hemisphere.

Oil and natural gas output from the storm battered Gulf of Mexico is slowly recovering, but about 27 percent of the Gulf's 1.5 million barrels per day of crude production remained shut on Thursday, the US Minerals Management Service said.

Worries over lost supply from hurricanes damage drove US oil to a record $70.85 at the end of August and prices are still up nearly 39 percent since the end of last year.

US government data showed crude stocks rose a slight 100,000 barrels last week, against forecasts of an 800,000 barrel drop, limiting Thursday's market gains.

US crude stocks are now 36.1 million barrels above this time last year. The swelling stockpile is adding to expectations that producers cartel Opec will cut crude output when it meets at the end of January.