10/10/2013 09:09 EDT | Updated 12/10/2013 05:12 EST

Oil price edges above $102 on hopes of US budget deal, concern over Libya

Oil prices edged above US$101 a barrel on Thursday on hopes that U.S. political leaders will reach a deal to raise the debt ceiling and after the temporary abduction of the Libyan prime minister.

By early afternoon in Europe, benchmark West Texas Intermediate crude for November delivery was up 42 cents to US$102.03 a barrel in electronic trading on the New York Mercantile Exchange.

President Barack Obama will meet with top House Republicans at the White House to seek a deal to raise the government's debt limit in the short term to prevent the first default on U.S. debt next week. Such a default could have a devastating effect on the global economy — and therefore for energy demand — so hopes of a deal underpinned crude prices.

Meanwhile, investors were monitoring developments in Libya, where gunmen abducted Prime Minister Ali Zidan from the hotel where he resides. He was freed hours later but the incident reminded investors of threats to crude supplies.

In the U.S., however, supplies remain high. The U.S. Energy Department said crude stocks rose by 6.8 million barrels last week, more than three times analyst expectations, at a time of year when consumption is seasonally weak.

Demand is not expected to grow, either. In its latest monthly report, the Organization of the Petroleum Exporting Countries kept its main forecasts for oil consumption unchanged since last month. It estimates global crude demand at 89.7 million barrels a day in 2013.

Demand for OPEC's own crude is seen at 29.9 million barrels a day this year — that is 500,000 barrels a day less than in 2012 and is estimated to fall further to 29.6 million barrels a day in 2014.

Brent, the benchmark for international crudes, rose 45 cents to US$109.51 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex: wholesale gasoline rose 2.93 cents to US$2.6523 a U.S. gallon (3.79 litres), heating oil added 1.71 cents to US$3.0345 a gallon and natural gas surged 8.7 cents to $3.766 per 1,000 cubic feet.