Oil prices rose on Wednesday on hopes of more Federal Reserve stimulus measures and after OPEC maintained its output ceiling. Price gains were, however, capped by news of soaring US energy stockpiles.
Brent North Sea crude for January rallied USD1.12 to USD109.13 per barrel in late afternoon deals in London.
New York's main contract, light sweet crude for delivery in January, or West Texas Intermediate (WTI), won 40 cents to reach USD86.19 a barrel.
Economists expect the US Federal Reserve to add to its stimulus efforts with an expanded bond-buying program.
With the US economy still sluggish despite hundreds of billions of dollars of quantitative easing (QE) operations over two years, the Fed is expected to continue selling short-term treasuries and using the proceeds to buy an equal amount of longer-term securities, aiming to lower long-term borrowing rates in the market and to encourage spending.
Prices were also supported by the International Energy Agency's monthly oil market report in which the group raised its 2013 demand growth estimate by 110,000 barrels a day.
The rise in crude prices comes after members of Organization of the Petroleum Exporting Countries agreed to leave their oil production ceiling intact at 30 million barrels per day during a ministerial meeting in Vienna on Wednesday.
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