Oil rises above $97 amid Nigerian violence

Distillate stocks, which include heating oil and diesel, were forecast to have increased by 300,000 barrels after three weeks of decline, the survey showed.

Oil traders will also be particularly sensitive to any signs of further fund investment in commodities at the start of the year as the sector rebounded from a loss in 2006, with the broad Reuters/Jefferies CRB Index up nearly 17 percent in 2007.

Oil rose nearly 58 percent last year, the biggest annual gain this decade, rallying strongly in the fourth quarter to touch a record $99.29 a barrel on November 21 as the dollar fell and U.S. oil inventories sank.

(Additional reporting by Fayen Wong in Sydney)