03/29/2012 11:59 EDT | Updated 05/29/2012 05:12 EDT

Oil below $104 as traders eye possible crude reserves release by US, Europe

NEW YORK, N.Y. - Oil dipped below $104 a barrel Thursday on expectations that the U.S. and Europe will release some crude reserves to push energy costs lower.

Benchmark oil for May delivery was down $1.96 to $103.45 a barrel in late morning trading on the New York Mercantile Exchange. The contract fell $1.92 to settle at $105.41 per barrel on Wednesday.

France's prime minister said Thursday that he there was "a good chance" that the United States and Europe will agree to release oil reserves into the market to drive down crude prices.

U.S. officials denied a report several weeks ago that said the U.S. and Britain were planning a co-ordinated reserves release. France confirmed this week that the talks were ongoing and that it was part of them.

The stock release would seek to lower prices, which have been driven higher in recent months by fears that a potential military attack by Israel or the U.S. on Iran's nuclear facilities would disrupt crude supplies.

Analysts worry that a further spike in crude prices will spark inflation and hurt consumer spending.