Crude prices rose on Thursday as positive data indicated U.S. economic recovery while tension in Algeria posed risks to oil supplies.

The Labor Department said U.S. initial jobless claims dropped 37,000 in the week ended Jan. 12, to 335,000, the lowest level in five years. That results beat analysts' estimates and indicated continuing recovery in the labor markets of the world's largest oil consumer.

Buying of crude oil was further boosted after the Commerce Department said U.S. housing starts in December jumped 12.1 percent to a 954,000-unit annual rate, the fastest pace in over four years.

Analysts said the rising confidence in U.S. economy boosted oil demand perspectives and pushed up oil prices.

Besides, the violent hostage crisis in Algeria, an important OPEC-member in North Africa, caused concerns about world oil supplies and added to supporting dynamic for crude prices.

Twenty-five foreign hostages escaped and six were killed on Thursday when Algerian forces launched an operation to free them at a remote desert gas plant.

Violent tension in the region posed great risks to oil supply chains. Spanish oil company Cepsa had started to evacuate personnel in Algeria following the attack.

Light, sweet crude for February delivery gained 1.25 dollars, or 1.33 percent to settle at 95.49 dollars a barrel on the New York Mercantile Exchange. It was the highest level since Sept. 18, 2012.

Brent crude for February delivery expired on Wednesday. The March contract rose by 1.42 dollars, or 1.29 percent to close at 111.10 dollars a barrel. Brent's premium to U.S. crude narrowed further to 15.61 dollars.