Oil slipped 1% to below $81 a barrel today, as data showing a drop in consumer confidence renewed demand concerns. The front-month US crude fell $1.17 to $80.94 a barrel by 12:09 p.m. EDT (1709 GMT), reversing earlier gains. The contract had climbed as high $83.16, the highest since $83.95 on January 11.

Brent crude fell $1.25 to $79.03.

US consumer sentiment declined slightly in early March, with Americans less positive about the job outlook, a survey released today showed. "The consumer confidence number and looking at the revision to January of the retail sales pulled crude back down," Richard Ilczyszyn senior market strategist at Lind-Waldock in Chicago.

Profit-taking also pulled prices lower, some analysts said. "People are taking profits after the recent surge to above $83.... At the same time, you're seeing a weakening of the stock markets and that's also pulling down oil," said Mark Waggoner, president of Excel Futures in Newport Beach, California.    

Stocks on Wall Street turned lower on the consumer sentiment data, which outweighed an unexpected increase in retail sales.

IEA report

Crude oil prices received little support from an International Energy Agency (IEA) report on Friday that said world oil demand this year will be slightly higher than previously expected because of growth in developing countries.

The agency lifted its absolute demand estimates for 2009 and 2010 by 70,000 barrels per day (bpd) from its estimate in February. It now expects world demand to average 86.57 million bpd this year.

"We revised up figures for both 2009 and 2010 on the basis of strong non-OECD demand," David Fyfe, head of the oil industry and markets division of the IEA, told Reuters.

By contrast, the 2010 OECD forecast was revised down, largely due to expectations of lower first-quarter heating oil demand in Europe and continued North American weakness, notably in middle distillates, the IEA said.

Officials at the Organization of the Petroleum Exporting Countries, which meets in Vienna on March 17 to discuss production policy, have said they do not expect a change in targets while prices are within their desired range. -Reuters