On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD106.75 a barrel during European morning trade, down 0.45%.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 2.8 million barrels in the week ending July 19, exceeding expectations for a decline of 2.4 million barrels.
Total U.S. crude oil inventories stood at 364.2 million barrels as of last week.
But oil prices remained under pressure, as the Commerce Department said U.S. new home sales jumped 8.3% to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008.
Analysts had expected new home sales to rise 1.8% to an annual rate of 482,000.
The data boosted expectations that the Federal Reserve will start to scale back its bond buying program later this year after Fed Chairman Ben Bernanke said last week that the pace of the bank’s bond purchases would depend on economic data.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Traders were also cautious after the preliminary reading of China’s HSBC manufacturing PMI fell to an 11-month low of 47.7 in July, from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6.
China is the world’s second-largest oil consumer behind the U.S.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery dropped 0.80% to trade at USD107.53 a barrel, with the spread between the Brent and crude contracts standing at USD0.78 a barrel.