Oil prices rose slightly to near $106 a barrel Friday after the U.S. denied reports it and the U.K. plan to release some their strategic crude reserves.
By early afternoon in Europe, benchmark oil for April delivery was up 58 cents to $105.69 in electronic trading on the New York Mercantile Exchange. The contract fell 32 cents to settle at $105.11 per barrel in New York on Thursday.
In London, Brent crude for May delivery was up 82 cents at $123.42 per barrel on the ICE Futures exchange.
Oil briefly dropped near $104 per barrel Thursday after reports said the U.S. and Britain had agreed to release spare supplies of oil in an effort to drive fuel prices lower. However, White House press secretary Jay Carney said there was no plan to provide more crude to markets.
Some analysts downplayed how much a possible release of supplies would lower prices.
"The price impact should a release actually develop would be largely psychological," energy analyst Ritterbusch and Associates said in a report. "A shortage of crude or products does not currently exist within the U.S. and European product markets appear adequately supplied."
Oil prices have risen from $75 in October amid investor optimism an improving U.S. economy will boost crude demand. However, the Energy Department's Energy Information Administration said Wednesday that gasoline demand was down 7.2 percent from a year ago.
"Despite an array of pleasing economic data in recent weeks, the latest surge in the price of oil can hardly be justified from a fundamental standpoint," said Joerg Zeuner, chief economist at VP Bank. "The demand for crude remains relatively weak."
Speculation about the effects on oil supplies of the tensions between Western powers and Iran over Teheran' nuclear program continued to keep a floor under prices.
In other energy trading, heating oil was up 1.45 cents at $3.2370 per gallon and gasoline futures gained 0.65 cent at $3.2950 per gallon. Natural gas slid 1 cent to $2.268 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.