Oil prices rise above $106 a barrel

Oil prices rose to near $106 a barrel Thursday after soaring more than $4 in the previous session as lower U.S. fuel inventories and the further depreciation of the dollar spurred buying.

U.S. stockpiles of gasoline and distillates, which include heating oil and diesel fuel, fell more than forecast last week, the U.S. Energy Department's Energy Information Administration reported Wednesday.

The inventory report in particular stoked worries that stockpiles of gasoline are falling right when analysts would like to see them rising - in advance of peak summer driving season. Gasoline inventories fell 3.3 million barrels last week, more than four times the decline analysts had expected.

Light, sweet crude for May delivery added 6 cents to $105.96 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract increased $4.68 to settle at $105.90 a barrel Wednesday.

The EIA reported that U.S. refinery activity also dropped, which analysts attributed to some refiners cutting gasoline production due to low profit margins. Gasoline inventories are 9 percent higher than a year ago.

Oil prices were also supported by U.S. economic news. The Commerce Department reported that new home sales declined in February to a 13-year low, and that orders for durable goods fell in the previous month while 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.