Oil prices were little changed on Thursday, holding on to gains after rebounding the previous day on data showing a drop in crude stockpiles in the US, the world's biggest consumer.

Oil had undergone a severe correction in the past two weeks, and prices are likely to remain volatile on concerns about economic recovery in the United States and unresolved sovereign debt issues in the euro zone.

By 0824 GMT, ICE Brent for July delivery was up 4 cents at $112.34 a barrel after rising more than $2 the previous day, above the 100-day moving average. Front-month Brent prices are down around 10 percent from the start of May.

US crude for June delivery fell 20 cents to $99.90  a barrel. 'We have a steady dollar and a strong equities market today, while yesterday's inventory report was also quite bullish,' Commerzbank analyst Carsten Fritsch said. 'However, things are more sentiment-driven than fundamentally driven at the moment.'    

Analysts said Wednesday's unexpected 1.6 million barrel drop in crude inventories at the delivery point for Nymex contracts of Cushing, Oklahoma lent prices some short-term upside support.

'The EIA data was very unexpected as US crude inventories have been rising. It gave prices a bit of a kick-along,' said Ben Le Brun, a Sydney-based markets analyst at CMC Markets. The support could prove short-lived, another analyst said, in the absence of any major catalysts.

'We think the run higher could continue for a little while longer, building on the head of steam that Wednesday's rally generated,' MF Global analyst Edward Meir said. 'However in the absence of any upside catalyst that can be considered a pivotal event, we suspect the move will ultimately be regarded as nothing more than a technical 'relief rally' in what is still a down market.'    

The market is also keeping track of when the US Federal Reserve will start to raise interest rates, a move that will tighten liquidity, curb consumers' spending power and reduce speculative buying in markets.-Reuters