Oil rose on Wednesday as unrest in the Middle East and North Africa continued to flare and as a report showed U.S. gasoline inventories fell more than expected.

Resilient gasoline demand in the face of strong and rising retail prices and falling stockpiles helped provide more lift for U.S. crude prices, while Brent initially wavered.

Analysts and brokers expect Brent's premium to its U.S. counterpart to ease as U.S. refiners seek light sweet crude barrels to boost gasoline output with the U.S. summer driving season approaching.

Prices were supported early as unrest in Saudi Arabia's neighboring Yemen and also in Syria kept worries about the potential for oil supply from the region being disrupted in focus.

Investors also eyed more violence in the Middle East after Palestinian rockets struck two cities deep in Israel and the ongoing fighting in OPEC-member Libya.

Brent crude futures for May delivery rose 35 cents to $116.05 a barrel by 12:54 p.m. EDT, trading in a range from $115.08 to $116.40.

U.S. crude futures for May delivery rose $1.14 to $106.11 a barrel, just off its high of $106.34.

Total U.S. crude trading volume was just above 310,000 lots, 64 percent below the 30-day average near 900,000.

Crude trading volumes have been curbed by volatility and uncertainty about unrest and revolts in the Middle East and North Africa and Japan's earthquake-ravaged economy.

Brent's premium to WTI was $1.04 lower at $9.90 a barrel, well off its March 1 record premium of $17.12.

U.S. government data showed a 5.32 million barrel drop in gasoline inventories in the week to March 18, surpassing an analyst forecast of a 1.8 million barrel drop.

The gasoline stocks drop came even with refiners boosting utilization rates by 0.7 percentage point, though the capacity use boost did not prevent a crude stocks rise that was more than expected and distillate stocks also posting a gain.

The gasoline stocks fall in the first three weeks in March was the biggest decline for the period since 1990, when the U.S. Energy Information Administration (EIA) started its weekly inventory report.

Gasoline demand over the past four weeks was 1.2 percent higher than a year earlier, the EIA said.

(Additional reporting by Ikuko Kurahone in London and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy)

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