LONDON, Aug 15 (Reuters) - Brent crude oil futures dipped below $114 per barrel on Wednesday as supply disruption concerns faded slightly, but hopes of central bank intervention to bolster the global economy kept prices near three-month highs.
Worries about disruption to supply, while still a significant factor, eased after the United States said it did not believe Israel had made a decision to attack Iran.
Brent crude was down 33 cents at $113.70 per barrel by 1207 GMT, after ending up 43 cents at its highest settlement since May 3 on Tuesday. U.S. crude fell 42 cents to $93.01 after closing 70 cents higher.
European Central Bank President Mario Draghi has said the ECB will flesh out plans to bring some stability back to strained euro zone bond markets early next month, driving hopes the bloc could start to right itself again in the second half of the year.
There were also hopes that the U.S. Federal Reserve might announce plans to print money to boost the economy.
"The market is still waiting for any indication that there will be an announcement on quantitative easing by (Federal Reserve Chairman) Ben Bernanke, and we'll be in a holding pattern," Gareth Lewis-Davies at BNP Paribas said.
Expectations of an imminent announcement were dampened, however, after July U.S. retail sales numbers came in better than expected.
U.S. Defense Secretary Leon Panetta, who visited Israel two weeks ago, told reporters it was important that military action should be the last resort.
Asked about comments by Israeli officials, Panetta said: "I don't believe they've made a decision as to whether or not they will go in and attack Iran at this time."
His remarks helped ease worries of a conflict after Israeli Prime Minister Benjamin Netanyahu said on Sunday that most threats to Israel's security were dwarfed by the prospect that Iran could obtain nuclear weaponry.
Brent has swung between a high of more than $128 per barrel and a low of $88.49 this year as investors' focus has shifted between heightened Middle East supply worries and a weakening growth outlook.
The range of nearly $40 is the widest since 2009, when it was $40.91. In 2011 the range was $34.65 and in 2010 $27.33.
PRICE CRUNCH
Some market observers said the high price of oil is likely to suppress demand and act as a brake on further increases.
"We do expect to see a negative impact on oil demand at current flat price levels," Olivier Jakob, an analyst at Petromatrix, said.
"It does take time to filter through, but we do believe that we are in that price zone."
Some market participants said the price was heading for a relatively sharp fall given the slack demand.
"Once the Iranian situation cools down and the supply in the North Sea recovers, I can see the price falling back towards $100 per barrel," said Rob Montefusco, a broker at Sucden Financial.
He noted that higher prices for prompt delivery of crude oil than for later months, a market structure known as backwardation, pointed to less severe supply constraint towards the end of the year.
A surprise increase in stockpiles in the world's biggest oil consumer also weighed on prices.
Total crude inventories rose 2.8 million barrels in the week to Aug. 10, the American Petroleum Institute said, compared with analysts' expectations for a drawdown of 1.7 million.
The API data will be followed by more closely watched numbers from the U.S. Energy Department at 1430 GMT, providing a pointer to the country's demand growth outlook. (Additional reporting by Manash Goswami and Elizabeth Law in Singapore; Editing by Anthony Barker and Jane Baird)
