SINGAPORE -- Oil prices hovered near $106 a barrel Wednesday in Asia as traders mulled whether higher fuel costs will undermine crude demand enough to stymie a two-month rally.
Benchmark crude for May delivery was up 22 cents at $106.47 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract gave up $3.67, or 3 percent, to settle at $106.25 on Tuesday.
In London, Brent crude for May delivery was up 75 cents to $121.67 a barrel on the ICE Futures exchange.
Key energy groups sent mixed signals to investors Tuesday about the impact a 33 percent surge in oil prices since mid-February has had on demand.
The International Energy Agency and the Organization of Petroleum Exporting Countries said higher prices had begun to chip away at fuel consumption, but left unchanged their crude demand growth forecasts for this year.
"High oil prices are yet to show any considerable impact on oil demand," Barclays Capital said in a report. "It is far too premature to signal that the first signs of demand destruction are already noticeable."
The American Petroleum Institute said late Tuesday that crude inventories fell 1.2 million barrels last week, close to an increase of 1.6 million barrels forecast by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.
However, the API also said inventories of gasoline fell by 4.6 million barrels while the Platts survey showed analysts expected a fall of only 1.3 million barrels, suggesting gasoline demand in the U.S. remains strong.
In other Nymex trading in May contracts, heating oil rose 1.9 cents to $3.19 a gallon and gasoline gained 2.0 cents to $3.18 a gallon. Natural gas futures were unchanged at $4.10 per 1,000 cubic feet. (AP)