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Oil prices surge on upbeat US data, Algeria unrest

Oil prices closed sharply higher Thursday, boosted by positive economic reports in the United States and fears linked to hostage-taking on an Algerian gas field.

The price of West Texas Intermediate for February delivery finished at $95.49 a barrel in New York, up $1.25 from Wednesday's close.

In London trade, Brent North Sea crude for delivery in March climbed $1.42, settling at $111.10 a barrel.

"Petroleum prices are moving higher in sympathy with stronger equities after a jump in US housing starts and a drop in initial claims for unemployment added to the case for US economic growth," said Tim Evans of Citi Futures.

Evans said that prices also were supported by recent events in Algeria that some cited as a "wake-up call" regarding geopolitical risk.

Foreign governments expressed growing alarm Thursday over the safety of their citizens after Islamists seized a gas plant in the Algerian desert near Libya and took dozens of hostages,

Late Thursday reports said a number of them had been killed in a dramatic rescue operation.

The gas field is jointly operated by British oil giant BP, Norway's Statoil and state-run Algerian energy firm Sonatrach.

"The latest news of the attacks put a geopolitical risk premium into pricing" of energy, said Victor Shum, an analyst at research group IHS Purvin and Gertz.