Futures were also supported by expectations a midweek US report on oil inventories would show crude stockpiles fell for the eighth straight week.

Oil inventories are predicted to drop 300,000 barrels in the week ended Jan 4, according to the average forecast in a Dow Jones Newswires poll of analysts.

Gasoline inventories on average are expected to rise 1.7 million barrels while distillate stocks are tipped to fall 600,000 barrels.

Refinery use is expected to be up 0.2 percentage point to 89.6 per cent of capacity.

'The combination of robust demand growth and anemic oil supply growth has underpinned the recent US stock draw and we believe will continue to support further draws in the near future,' Goldman Sachs has said in a research note.

Light, sweet crude for February delivery rose 40 cents to US$95.49 (S$136.80) a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.

The contract dropped US$2.82 to settle at US$95.09 a barrel on Monday.

Comments by US Treasury Secretary Henry Paulson on Monday suggesting there is no simple fix for the US housing crisis added to worries about the economy raised by last Friday's Labour Department jobs report.

The government's data showed that employers added far fewer jobs last month than expected.

'Year after year as oil has gone up I've told you it was a story of economic growth,' wrote Mr Phil Flynn, an analyst at Alaron Trading Corp, of Chicago, in a research note.

'By the same token, if the US slips into a recession, then do not expect oil to keep going higher.'

'The weakening jobs market in the US has the Fed backed into a corner and the prospect for oil looks about as bearish in 2008' as it has since the days after the Sep 11, 2001 terrorist attacks, Mr Flynn wrote.

Brent crude for February delivery rose 53 cents to US$94.92 a barrel on the ICE Futures exchange in London.

Heating oil futures rose 1.36 cents to US$2.6071 a gallon (3.8 litres) while gasoline prices added 1.12 cents to US$2.4410 a gallon.

Natural gas futures rose 5.2 cents to US$7.931 per 1,000 cubic feet. -- AP