Brent crude slipped on Wednesday, but stayed above $100 per barrel as weak global economic data fuelled expectations of a stimulus response by central banks, and rising tension over Iran's nuclear programme fed worries about supply disruption.

Iran said it had successfully tested medium-range missiles capable of hitting Israel as a response to threats of attack, adding to mounting tension between Tehran and the West, and increasing the risk premium on oil prices.

Brent crude slipped 49 cents to $100.19 per barrel, after jumping more than 3 per cent in the previous session on short-covering before the US Independence Day holiday on Wednesday.

US crude fell 54 cents to $87.12 after settling on Tuesday at its highest close since May 30.

'Oil prices are being supported by expectations of monetary stimulus from central banks, coinciding with concerns of supply disruptions from Iran,' said Natalie Robertson, an analyst with ANZ Bank.

There was a risk of Iran blocking tankers in the Strait of Hormuz, she added.

Iran has previously threatened to block the strait, through which more than a third of the world's sea-borne oil trade passes, in response to increasingly harsh sanctions by the United States and its allies aimed at forcing it to curb its nuclear research programme.

The Islamic Republic announced the 'Great Prophet 7' missile exercise on Sunday after a European embargo against Iranian crude oil purchases took full effect following another fruitless round of world power talks with Tehran.

Risk assets such as commodities and stocks have also been supported by hopes for more monetary stimulus to boost slowing economic growth.

The European Central Bank is expected to cut its main refinancing rate to a record low below 1 per cent at its policy meeting on Thursday. Investors are also hoping for action from the US Federal Reserve and China's authorities.

However, Deutsche Bank and Societe Generale have lowered their 2013 Brent price outlooks on expectations of weak demand because of the gloomy economic climate.

'We believe that the euro zone crisis, the US fiscal cliff, and the possibility of a hard landing in China will give markets plenty to worry about and will keep risk appetite low and constrained,' Societe Generale said on Wednesday.

The technical charts point to a downward movement for oil prices in the third quarter of the year, with Brent to drop to $71.37 per barrel for that period, Reuters analyst Wang Tao predicted.

'I don't think the economy will be growing and there is plenty of supply, so barring any disruption of supply because of Iran, the upside will be limited,' said Ken Hasegawa, a commodity sales manager at Newedge Japan.

US crude oil stocks fell more than expected last week, according to data released by industry group the American Petroleum Institute, helping to support prices.

Crude inventories tumbled by 3 million barrels in the week to June 29, well above the 1.9-million-barrel drawdown forecast by analysts, with Gulf Coast stocks off nearly 4.3 million barrels.

Wednesday's US holiday pushes back the US Energy Information Administrations’ inventory data to 11am on Thursday.

Also supporting prices, Norwegian trade unions put off a decision to escalate a strike by offshore oil and gas workers until Friday, extending their battle with employers to nearly two weeks. – Reuters