The price of oil rose closer to $95 a barrel on Thursday January 17, 2013 as Islamic militants took hostages at a natural gas plant in Algeria and U.S. crude supplies fell unexpectedly.

By early afternoon in Europe, benchmark oil for February delivery was up 42 cents to $94.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 96 cents to close at $94.24 a barrel on Wednesday.

While at least 50 Algerian and foreign hostages have reportedly managed to escape from the gas plant 1,300 kilometers (800 miles) south of Algiers, the capital city, dozens more are still being held. The plant in the Sahara desert has been surrounded by the Algerian army.

"Algeria is not only a leading gas producer; it also produces 1.2 million barrels of crude oil per day," said analysts at Commerzbank in Frankfurt. "Even if supply risks have taken a back seat of late, they may flare up again at any time, resulting in a renewed risk premium on the oil price."

New figures showed oil stocks fell by 1 million barrels, or 0.3 percent, to 360.3 million barrels in the United States last week, while analysts had forecast a rise of 2.5 million barrels.

Despite the drop, supplies of oil and gasoline are above average for this time of year, with crude inventories nearly 9 percent higher than a year ago and gasoline levels more than 3 percent higher.

U.S. production of crude, at more than 7 million barrels a day, is the highest in 20 years.

"Compared to a year ago, the U.S. has added to the world more crude oil than it has taken out" with the sanctions it has led against Iran because of the Islamic Republic's nuclear program, said Olivier Jakob of Petromatrix in Switzerland.

Traders are waiting for China's growth data Friday to help assess the strength of the global economy. China will release fourth-quarter growth data for 2012 as well as overall GDP figures for the year.

Meanwhile, brent crude, used to price international varieties of oil, was up 57 cents to $110.25 per barrel on the ICE Futures exchange in London.