Oil prices slid toward $106 a barrel Thursday as traders booked profits on recent gains, but remained well supported on indications that the two-month crude rally hasn't yet undermined consumer demand.

By early afternoon in Europe, benchmark crude for May delivery was down 79 cents at $106.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 86 cents to settle at $107.11 on Wednesday.

In London, Brent crude for May delivery was down 86 cents to $122.02 a barrel on the ICE Futures exchange.

Traders are mulling whether global crude demand is strong enough to justify extending a 27 percent surge in prices since mid-February. Oil touched $113.46 in intraday trading Monday, the highest since September 2008.

On Wednesday, the Energy Information Administration reported U.S. gasoline supplies fell by 7 million barrels last week, a bigger drop than the 1.3 million barrels forecast by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

"As gasoline stocks plunged, a major dent was placed in the argument that high prices are beginning to deter demand," Ritterbusch and Associates said in a report.

Others, however, noted that the bullish effects of the gasoline figures could soon fade.

"The positive sentiment on domestic gasoline demand caused by the plunge in inventories might prove rather short-lived," said JBC Energy in Vienna, noting that the latest MasterCard SpendingPulse survey showed U.S. gasoline demand falling 1.9 percent on the year, "presumably in line with skyrocketing retail prices."

The EIA also said crude supplies rose by 1.6 million barrels last week to 359.3 million barrels, which is 1.5 percent above year-ago levels.

Reports that Kuwait restarted its oil exports after a temporary halt on Wednesday due to sandstorms also weighed on prices.

In other Nymex trading in May contracts, heating oil dropped 2.18 cents to $3.181 a gallon and gasoline fell 2.44 cents to $3.218 a gallon. Natural gas futures were down 6.3 cents at $4.078 per 1,000 cubic feet.

-- Associated Press