NEW YORK, Dec 28: Oil rose on Friday on US supply concerns, the slumping dollar and mounting global tensions.

US crude traded up 23 cents to $96.85 a barrel by 1705 GMT. London Brent gained 12 cents to $94.90 a barrel.

A US government report on Thursday showed unexpectedly large draws in crude and distillate inventories in the world’s top consumer. US crude inventories are now at their lowest level in nearly three years, adding to winter supply worries that helped push oil to nearly $100 in November.

“Escalating geopolitical tensions, tightening oil supplies and a weakening dollar would seem to stack the deck in favour of further upward movement,” said Mike Fitzpatrick, vice president at MF Global.

The assassination of Benazir Bhutto on Thursday stoked geopolitical concerns, although Pakistan is not a major crude producer and unrest is unlikely to directly affect oil flows.

“The Bhutto story will keep being a factor into next week, and it should help keep a floor under the market, along with the other geopolitical uncertainties,” said a New York broker.

Oil has rallied more than 58 per cent since the start of the year, hitting a record $99.29 on Nov. 21, although the credit crisis and forecasts for above average temperatures this winter have raised concerns about US demand.

Turkish raids on Kurdish guerrilla targets in northern Iraq have also supported prices by raising the risk to regional supply, although most of the Opec nation’s oil exports flow via its southern ports.—Reuters