On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD103.02 a barrel during European morning trade, gaining 0.31%. It earlier rose by as much as 0.5% to trade at a session high of USD103.19 a barrel, the highest since April 5.
Oil’s gains came as the U.S. dollar edged lower against the euro after a European Central Bank official hinted at the possibility of more bond buying to help indebted euro zone member Spain.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.17% to trade at 79.81.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Oil prices also drew support from a U.S. government report showing a strong drawdown of gasoline supplies, however gains were kept in check amid rising oil supplies.
Weekly data from the U.S. Energy Information Administration on Wednesday showed that U.S. crude oil inventories rose by 2.8 million barrels last week to 365.2 million, the highest level for this time of year since 1990.
Total motor gasoline inventories declined by 4.3 million barrels, compared to expectations for a 1.3 million barrel decline, while supplies of distillate fuel, including heating oil and diesel fell by 4.0 million barrels.
Meanwhile, oil traders looked forward to talks scheduled to take place over the weekend in Istanbul, Turkey between Iran and six world powers, surrounding Tehran's disputed nuclear program.
The six world powers include, the U.S., the U.K., France, Germany, Russia and China.
On Wednesday, Iran's top nuclear negotiator, Saeed Jalili said that his country plans to present new proposals at upcoming talks on its controversial nuclear program.
"The Iranian delegation is to take new initiatives in talks and we hope the other side will do the same," Jalili said.
The stand-off between Iran and Western countries has dominated sentiment in the oil market in recent months, pushing up prices from USD75 a barrel in October to as high as USD110 in early March.
Market participants were also eyeing the release of Chinese first quarter gross domestic product figures on Friday.
The World Bank was the latest to cut China’s growth figures, saying it expected the Asian nation to grow at a rate of 8.2% this year, down from a January projection of 8.4%.
Investors have been searching for clues in regards to Chinese growth prospects in recent weeks amid fears the country is headed towards a ‘hard landing’. China lowered its GDP growth target for this year to 7.5% last month, the lowest in eight years.
Official trade data released Tuesday showed that China's March imports of crude oil rose 8.7% on the year to 5.55 million barrels per day, off the previous month's record, but still at their third highest ever.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery added 0.15% to trade at 120.05 a barrel, with the spread between the Brent and crude contracts standing at USD17.03 a barrel
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