Oil prices rise in Asian trade

SINGAPORE: Oil prices rose in Asian trade on Thursday after Syria accused Israel of staging an air raid on a military research centre, raising tensions in the crude-producing Middle East.

New York s main contract, light sweet crude for delivery in March, increased four cents to $97.98 a barrel and Brent North Sea crude for March delivery gained 16 cents to $115.06.

"Some geopolitical risk premium has crept into oil futures," said Victor Shum, managing director at IHS Purvin and Gertz in Singapore, referring to the attack.

The Syrian army accused Israel of launching a dawn strike targeting a military research centre in Jamraya, near Damascus on Wednesday, in a statement carried by state news agency SANA.

Analysts said the attack increased the risk that the 22-month-old conflict in Syria could spill over into neighbouring states, sparking fears of supply disruption in the Middle East, the world s biggest crude supplier.

Other analysts said global energy demand remained relatively weak with robust supplies.

"Crude oil market fundamentals are still thought to be fairly weak, with some building pressures on OPEC (Organization of the Petroleum Exporting Countries) to rein in production," said Sanjeev Gupta, who heads the Asia Pacific oil and gas practice at Ernst & Young.

DBS Bank said despite news of a 0.1 percent contraction in US gross domestic product (GDP) in the fourth quarter of 2012 -- mainly because of falling public spending -- there were upbeat signs for the economy.

"The good news is the GDP report wasn t nearly as bad as it looked," DBS said in a market commentary, noting that private consumption, business investment and housing all saw growth.

"All this is good, strong stuff. It s also private sector stuff and that s what s going to have to drive the recovery going forward, as the government spending component in the GDP report makes so very clear," it said.

US public sector spending fell nearly 7.0 percent in the fourth quarter.