New York's main contract, light sweet crude for delivery in September, gained 18 cents to USD 97.58 a barrel.
Brent North Sea crude for September climbed 80 cents to USD 118.23 in late afternoon deals in London. The US Labour Department announced today that new claims for unemployment benefits fell to 398,000 last week.
That was the lowest level in nearly four months and the first time they had fallen below 400,000 since early April. The data lifted market sentiment because the United States is the world's biggest consumer of oil.
Crude futures also rose as US lawmakers scrambled for a compromise to avert a devastating debt default for the world's biggest economy, analysts said.
A drawn-out political impasse in the United States, as polarised politicians struggle to find a middle ground over a debt solution, has exacted its toll on traders.
"Some market talk that a deal on the US debt ceiling may be hammered out had offered some better (oil price) sentiment but there is no confirmation yet," said Sucden analyst Brenda Sullivan.
Republican lawmakers today pressed ahead with a vote on a plan to avert a calamitous US debt default, ignoring White House warnings of a veto as the political wrangling infected global markets.