Benchmark oil for March delivery fell 45 cents to close at $97.49 a barrel on the New York Mercantile Exchange.
Oil is still rose more than $5 for the month of January, giving it the biggest monthly increase since August.
Those gains are reflected in pump prices. The average price of a gallon of gas has risen 10 cents in just the past week, to $3.42 a gallon, according to AAA, Oil Price Information Service and Wright Express. Gas hasn't averaged more than $3.40 a gallon since the last day of November.
The government said the number of Americans seeking unemployment aid rose sharply last week, although it remained at a level consistent with moderate hiring. Traders will get a further indication about the strength of the jobs market Friday, when the Labor Department issues the closely followed monthly nonfarm payrolls report.
Brent crude, used to price international varieties of oil, rose 65 cents to $115.55 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline lost 1 cent to $3.03 per gallon.
— Natural gas was flat at $3.24 per 1,000 cubic feet.
— Heating oil rose 1 cent to $3.13 a gallon.
Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this story.