Oil Above $106 After Overnight Jump

"What the U.S. is doing is to try to match their crude oil stocks to the low refinery capacity by pulling back on their imports," Pervan said. "That should start to manifest itself in lower oil prices in the near term."

Oil prices were also supported by U.S. economic news. The Commerce Department said new home sales fell last month to a 13-year low, and that orders for durable goods fell in February when analysts had expected an increase.

Many investors view weak economic news as a sign that the U.S. Federal Reserve will cut interest rates more sharply than expected later this year. Lower interest rates tend to further weaken the dollar, which boosts oil prices.

In other Nymex trading, heating oil futures lost 0.77 cent to $3.0515 a gallon while gasoline prices rose 0.21 cent to $2.745 a gallon. Natural gas futures dropped 6.4 cents to $9.508 per 1,000 cubic feet.

In London, Brent crude gained 51 cents to $104.50 a barrel on the ICE Futures exchange.