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NEW YORK, Jan 18 AFP

January 21 2013, 07:44AM

Oil prices have risen as investors banked on greater demand following encouraging economic data in China and the United States.

New York's main contract, West Texas Intermediate for February, settled at $US95.56 a barrel, up seven US cents from Thursday's close.

Brent North Sea crude for delivery in March rose 79 US cents, closing at $US111.89 a barrel.

Crude oil prices were supported by positive economic news out of the world's two biggest crude oil consumers.

On the heels of Thursday's better-than-expected US data on jobless claims and housing starts, China announced Friday that while economic growth slowed for the second straight year in 2012, output dashed 7.9 per cent higher in the fourth quarter compared with the year-ago period.

The International Energy Agency, in its monthly report, raised its 2013 global demand forecast by 240,000 barrels per day, to 90.8 million bpd.

The IEA said cited unexpectedly strong data for demand in the United States and China in the 2012 final quarter.

"If the IEA is correct, then both the supply and demand forces are pointing towards higher oil prices in the near term," said Fawad Razaqzada of GFT.

Friday's action came "on book squaring ahead of the US Martin Luther King Jr. holiday," said Tim Evans of Citi Futures.

US markets will be closed Monday for the federal holiday.