The price of oil rebounded today to near $106 a barrel, supported by continuing tensions in Egypt and the sharp drop of US oil stocks reported earlier in the week.

Benchmark crude for August delivery was up 71 cents at $105.62 a barrel in electronic trading on the New York Mercantile Exchange.

The Nymex contract fell $1.61 to close at $104.9 last night as profit-taking took hold after prices had hit their highest levels seen since April following two weeks of gains.

Brent crude was up 51 cents at $108.24 on the ICE Futures exchange in London.

US oil prices had previously been buoyant after figures showed a dramatic drop in US supplies of oil and petrol over the past two weeks. Traders took that as a sign of rising demand in the world's largest economy.

US oil supplies have dropped 20.2 million barrels, which is slightly more than one day's consumption for the US Petrol supplies have fallen 4.3 million barrels.

Demonstrations in Cairo today by supporters of ousted president Mohammed Morsi highlighted the instability of the political situation in Egypt, which controls the Suez Canal, a crucial transport route for oil and gas shipments from the Middle East.

Gains were limited by the latest forecast by the International Energy Agency which said that rising oil production in the US and Canada would help supplies outpace global oil demand next year.