Oil rose above $96 today on expectations that US crude stocks would continue to fall and fresh violence in Nigeria revived supply concerns.
US light crude for February delivery rose 46 cents to $96.44 a barrel by 0708 GMT, while London Brent crude rose 48 cents to $94.33 a barrel.
US crude oil inventories were expected to have fallen 1.8 million barrels last week, the seventh straight week of decline, as refiners boosted utilisation. Distillate stocks, which include heating oil and diesel, were forecast to have increased by 300,000 barrels after three weeks of decline.
The weekly oil inventory report will be released tomorrow, a day later than usual due to the New Year holiday.
Meanwhile, temperatures in northwest Europe and in the US northeast were expected to fall below normal later this week, pushing heating demand above seasonal averages, weather forecaster Meteorlogix said yesterday.
News of renewed violence in Nigeria, the world's eighth-largest oil exporter, have escalated concerns about the reliability of the country's oil supplies.
Suspected militants attacked two police stations, a luxury hotel and a night club in Nigerian oil city Port Harcourt on Tuesday, killing 18 people, police said. Fears of political instability in Pakistan in the wake of Benazir Bhutto's killing have also supported oil prices.