However, cold weather across much of the country was expected to keep demand high, as heating oil prices were just off highs not seen since early 2015.
The main bullish factors were: the Opec+ output cut deal extension throughout 2018, a strong Opec compliance to the cut deal in December 2017, strong economic and financial data starting the year 2018, United States crude oil stocks continuous drawdown, a cold weather in North America boosting demand for heating oil, and socio-economic protests in Iran.
According to weekly government statistics, US stocks fell more than expected, continuing a steady drawdown of supplies in the world's largest oil consumer, though stocks of distillates and gasoline rose on heavy refining activity driven in part by year-end adjustments. But prices have rallied almost 50 percent since the middle of the year on robust demand and strong compliance with the production limits.
Oil closed above $62 a barrel for the first time in more than three years after US crude stockpiles shrank by the most since the summer driving season.
Brent for March settlement advanced 23 cents to end the session $68.07 a barrel on the London-based ICE Futures Europe exchange, the highest since December 2014.
The U.S. Energy Information Administration reported that U.S. crude stocks fell by 7.4 million barrels in the last week of 2017, exceeding expectations, as refiners boosted activity to their highest rate since 2005.
Daily March Brent Crude
Benchmark oil futures opened the year 2018 with levels above $60, which was the first time in three years.
USA output is up nearly 16 percent since mid-2016.
Oil prices retreated from their highest level in 2.5 years on Friday as surging USA production appeared to offset supply fears stoked by anti-government rallies in Tehran. USA refiners boosted operating rates for a third straight week, contributing to the decline in stored oil supplies.
WTI prices were further boosted by an EIA report of a 4.6 million barrel weekly drop in USA commercial crude storage levels.
Crude oil is under a little pressure early Friday.
Libya is to start repairing the pipeline near the Es Sider terminal this weekend, a Libyan oil official said, while the Forties pipeline was already pumping close to normal levels, according to trading sources.