Oil edges up toward $108 as economy brightens

Oil prices rose to near $108 a barrel Thursday after new U.S. indicators underlined a modest recovery in the world's biggest economy.

By early afternoon in Europe, benchmark oil for October delivery was up 65 cents to $107.88 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell Wednesday by $1.31 to close at $107.23 a barrel.

As immediate concerns about political stability in the Middle East eased, the main focus was on market fundamentals and the releases of the major U.S. macroeconomic data.

The Labor Department released data Thursday showing applications for U.S. unemployment benefits fell to 323,000 last week, near their lowest level in 5 years and in line with trends indicating fewer layoffs and steady net job gains.

A jump in U.S. auto sales also helped brighten the outlook for oil consumption. General Motors and other U.S. carmakers posted strong sales in August, giving the auto industry its best month in six years.

"This is globally good for the U.S. economy although for gasoline demand it also translates into a fleet that should improve further its fuel efficiency," said Olivier Jakob of Petromatrix in Switzerland.

The Federal Reserve also said Wednesday that surveys showed moderate growth throughout the country.

Investors will later monitor fresh information on U.S. stockpiles of crude and refined products.

The American Petroleum Institute reported that U.S. crude stocks fell by 4.2 million barrels last week, well over the draw of 2.5 million barrels expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Data from the Energy Department's Energy Information Administration the market benchmark will be out later Thursday.

Elsewhere in the market, Brent, the benchmark for international crudes, was up 36 cents to $115.27 a barrel on the ICE Futures exchange in London. Brent has risen sharply recently due to fears the U.S. could intervene militarily in Syria's civil conflict, even if the scale of the attack is now expected to be low.

In other energy futures trading on Nymex:

Wholesale gasoline fell 0.38 cent to $2.8605 per gallon.

Heating oil added 0.35 cent to $3.1406 per gallon.

Natural gas was steady at $3.684 per 1,000 cubic feet.

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Pamela Sampson in Bangkok and Christopher S. Rugaber in Washington contributed to this report.