THE price of oil gained 1.5 percent and finished just below US$98 a barrel yesterday on rising concerns about Middle East tensions and their possible impact on oil supplies.

Some analysts speculated that the higher price also reflects some traders' expectations that weekly oil supply data due Wednesday will show a sizeable drop.

US benchmark crude for August delivery rose US$1.43 to close at US$97.99 a barrel on the New York Mercantile Exchange. Oil was as high as US$98.28 in the morning.

Protests in Egypt aimed at ousting Mohammed Morsi, the country's first democratically elected president, continued yesterday. Traders were concerned that the protests in Egypt and the civil war in Syria could affect the production and transport of oil supplies in the Middle East and North Africa.

In London, Brent crude gained 84 cents to end at US$103 a barrel on the ICE Futures exchange.

Brent, the benchmark for international crude oil, tends to react more strongly to potential disruptions to Middle East supplies. For some analysts, the sharper gain in the US benchmark suggested that some traders are looking for news from the Energy Department of a big drop in US supplies.

"We are looking for a total crude supply draw of around 3 million barrels (per day in) Wednesday's EIA report but we wouldn't be surprised by a significantly larger decline," wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.

Reports on manufacturing in the world's two biggest economies gave opposite impressions.

US manufacturing activity grew in June behind a pickup in new orders and stronger production. The increase suggests factories could rebound in the second half of the year and help the economy grow.

Meanwhile China's manufacturing sector weakened again in June amid a credit crunch and slower US and European orders, two surveys showed. The findings added to signs that growth in the world's second-largest economy is decelerating.

In other energy futures trading on Nymex:

- Natural gas rose 1 cent to finish at US$3.58 per 1,000 cubic feet.

- Heating oil rose 1 cent to end at US$2.87 per gallon.

- Wholesale gasoline added 2 cents to finish at US$2.74 per gallon.