London: Oil fell yesterday, weighed down by swelling crude inventories in the United States while President Barack Obama is expected to set a long-term goal to cut oil imports.

The drop in prices, however, was capped by civil unrest in North Africa and the Middle East. North Sea Brent crude futures fell 25 cents to $114.90 a barrel at 1150 GMT. US crude fell 36 cents to $104.43.

The trading volume on both contracts was relatively small, with the end of the first quarter near. Prices have risen from $93 at the end of December, touching 2-1/2-year highs just below $120 in February.

Christopher Bellew with Bache Commodities cited bulging crude oil stocks in the United States and a dip in fuel demand between the winter heating season and the summer gasoline season as a factor capping any gains in oil prices.

"In the short term we are at the end of the Northern Hemisphere winter, with a seasonal fall in demand," Bellew said.

"The dichotomy is between the world being well supplied with oil in the short term and the uncertainties that loom in the medium term."

In the medium term, prices are likely to be supported by civil unrest in the oil-rich Arab world and an expected increase in oil and gas demand following a global backlash against nuclear power generation. Nuclear reactors in Fukushima, Japan, continue to emit radioactivity after severe damage caused by an earthquake and tsunami earlier in March.

In the long term, Obama will outline a strategy to cut oil imports by a third over 10 years, focusing on energy security at a time that high gasoline prices could stall US economic recovery.

Ambitious targets

The White House says this is a deliberate turn toward energy security by Obama and will be followed by other events to highlight his strategy. But the immediate market reaction was limited. "It sounds like a very ambitious target indeed," said Carsten Fritsch, analyst at Commerzbank.

"It will be difficult to achieve. Perhaps there will be large energy, fuel saving measures or they would need to allow more oil drilling, but after the Gulf of Mexico [spill] it could be difficult."

US government oil data is expected to show a 1.8 million barrel increase in the week to Friday when it is released at 1430 GMT, a Reuters poll of analysts showed.