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Oil edges above $96 despite growing stockpiles

The price of oil edged above $96 per barrel Friday despite ample stockpiles of crude amid signs of growth in the world's two largest economies.

By early afternoon in Europe, benchmark oil for March delivery was up 32 cents to $96.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 72 cents to finish at $95.95 a barrel on the Nymex on Thursday.

Recent optimism about improving economies in the U.S. and China has helped support an upswing in oil prices. The U.S. housing and jobs markets have shown improvement, while China's manufacturing output has been gaining steam.

However, Michael Hewson of CMC Markets said that "prices could slip back" if crude inventories continue to rise. The Energy Information Administration said Thursday that U.S. oil supplies rose by 2.8 million barrels last week, more than analysts expected. That pushed oil stockpiles to 363.1 million barrels, up 8.5 percent from year-ago levels.

Oil prices also benefited from investors' confident mood, reflected by rising indexes on the main European stock markets and gains by the euro against the dollar.

A weaker dollar makes crude cheaper — and a more attractive investment — for traders using other currencies. On Friday, the euro was up at $1.3436 from $1.3378 late Thursday in New York.

"Crude oil prices extended gains on Friday ... mainly supported by the weaker US dollar that offered strong upside momentum to the market," said a report from Sucden Financial Research in London.

Brent crude, used to price international varieties of oil, was up 35 cents at $113.63 per barrel on the ICE Futures exchange in London. Hewson said the price of Brent is "stuck firmly in a dead zone of inactivity, but near its recent range highs."

In other energy futures trading on Nymex:

— Wholesale gasoline fell 0.12 cent to $2.8755 per gallon.

— Natural gas rose 2.4 cents to $3.47 per 1,000 cubic feet.

— Heating oil added 0.08 cent to $3.0772 a gallon.

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Pamela Sampson in Bangkok contributed to this report.

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