Oil prices higher in Asia on positive US jobs report

Oil prices edged up in Asian trade today as a sharper than expected decline in US unemployment benefits claims encouraged traders, analysts said.

New York's main contract, light sweet crude for January delivery rose 19 cents to $88.56 a barrel.

Brent North Sea crude for delivery in January was up 24 cents to $91.23.

"What's spurring the rise in oil pricing really was the US Labour Department report on jobless claims," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

"Those claims dropped and so because of this, optimism about the US economy increased and therefore we are seeing oil pricing getting firmer."

Data released late yesterday showed initial claims for US unemployment benefits dropping more than expected last week to 421,000, a decline of 17,000 from the previous week's upwardly revised figure.

However, Shum said traders were cautious ahead of the weekend as expectations the Chinese central bank would raise interest rates tempered their enthusiasm.

"China may raise interest rates over the weekend and so there's a risk that there is monetary tightening that will harm economic growth in China, and that is bearish for oil prices," Shum told AFP.

China is the world's biggest energy consumer according to the International Energy Agency.