Oil climbs above $88, eyes higher weekly close

World oil prices advanced above $88 a barrel in Asian trade Friday on reports of increase in energy demand ahead of Christmas New year holidays.

Light sweet crude for January delivery was seen trading at $ 88.31 a barrel at 12.00 noon Singapore time while Brent crude was at $ 92.17 a barrel in London. The January Brent contract expired yesterday at $91.71 a barrel.

Analysts also attributed oil’s climb to a weak dollar as the dollar index slipped 0.3 percent to 79.95, remaining well below its two-month high of 81.44 set in late November.

Signs of improved demand were reinforced by the latest Department of Energy's weekly report that showed US crude reserves sank a massive 9.9 million barrels in the week to December 10 the biggest weekly drop in eight years.

Oil soared on Wednesday after the US government's Department of Energy said that American crude reserves fell 9.9 million barrels in the week to December 10 - the biggest weekly drop in eight years.

U.S. oil prices hit a two-year high of $90.76 on December 7 and have since trended lower, dropping below $87 earlier this week. Technicals showed that crude was set to fall to $85.41 next week, which would be the lowest since December 1.

The Oil and dollar-denominated commodities often move inversely to the dollar. A weaker dollar typically lifts oil prices as it lower the value of greenbacks paid to producers while making it less expensive for oil consumers using other currencies.

On Thursday, oil prices fell on profit-taking a day after jumping sharply as official data showed a huge decline in US crude inventories.

New York's main contract, light sweet crude for January, lost 92 cents to $87.70 while Brent crude for delivery in January dipped 49 cents to $91.71a barrel in London trade.