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Oil higher on growth prospects

Thursday, January 31 07:35:50

Brent crude hovered near $115 per barrel today, not far from a more than three-month high, as the U.S. Federal Reserve's pledge to stick to its bond-buying stimulus plan and upbeat euro zone data fuelled optimism about oil demand.

But a surprise contraction in U.S. economic growth and a surge in crude stocks to a seasonal record last week in the world's top oil consumer kept a lid on oil prices.

"After many years of fears that the economy is going to crash, it seemed like the worst is behind us. So better news out of China and expectations for recovery in the United States caused risk money to come back into equities, commodities and energy," said Tony Nunan, an oil risk manager at Mitsubishi.

Brent edged up 11 cents to $115.01 a barrel by 0720 GMT, after hitting $115.25 earlier in the day -- the highest since Oct. 16.

U.S. crude was down 15 cents at $97.79, after reaching a more than four-month high on Wednesday.

Riskier assets, like oil, metals and equities, have been boosted in recent days by a slew of economic data indicating global growth was gaining traction, and more recently by the Fed's accommodative policy.

The Fed on Wednesday kept its monthly bond-buying plan while indicating a recent stall in U.S. economic growth was likely temporary and predicting the nation's job market would continue to improve at a modest pace.

U.S. private-sector employers added 192,000 jobs in January, more than economists were expecting, the ADP National Employment Report showed on Wednesday.

Traders are now waiting for key U.S. nonfarm payrolls data on Friday and official manufacturing data out of China that is expected to show factory activity picking up pace.

China's promising economic growth forecast for 2013 has raised expectations for robust demand for fuel from the top energy consumer, while data from the euro zone that show economic sentiment improving more than expected across all sectors in January has also helped brighten the outlook for oil demand. ( C) Reuters