Crude oil futures trimmed losses near midday after a U.S. official called inaccurate a report that the U.S. would soon release oil from its emergency stockpile.

Prices earlier fell sharply after a report that the U.K. expects the U.S. to move soon to open its emergency oil reserves in the face of rising prices.

Reuters quoted U.K. sources saying they expected the request soon and said the U.K. would cooperate with the move.

The U.S. was the lynchpin of a move by the International Energy Agency in June 2011 to release 60 million barrels of crude oil from its Strategic Petroleum Reserve amid concerns over a supply shortage caused by the Libyan civil war. The U.S. provided half of the emergency oil released.

Rising prices amid worries about a potential cutoff in Iranian oil supplies, as western sanctions tighten, has stirred market chatter than a similar release may be forthcoming. North Sea Brent crude oil prices have recently traded to their near their highest levels since 2008 and gasoline prices in the U.S. have climbed and are widely expected to top $4 a gallon nationwide for the first time since summer 2008.

Nymex April light, sweet crude oil was trading 52 cents lower at $104.91 a barrel after the U.S. official's comment. It had swung from a 50 cent gain to a loss of about $1 on the initial report. Crude traded down to the lowest intraday level since Feb. 17, at $103.78 and earlier hit a high of $106.18 a barrel.

April Brent crude was $1.45 lower at $123.52 a barrel, after moving in a range of $120.97 to $125.35 a barrel.

-By David Bird, Dow Jones Newswires; 212-416-2141; david.bird@dowjones.com