In this Dec 1, 2011 photo, Sstore manager Joseph Sublett changes gasoline prices to reflect a three-cent drop at a Little Rock, Ark., Conoco-Phillips station. Consumers paid more for food, clothes and medical services last month, but overall prices were unchanged. Energy costs fell for the second straight month. (AP Photo/Danny Johnston)

Oil prices rose above $94 a barrel Friday amid concerns about sanctions against major oil exporter Iran and signs the U.S. economy is slowly improving, which could boost demand for crude.

By early afternoon in Europe, benchmark crude for January delivery was up 50 cents to $94.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $1.08 to settle at $93.87 on Thursday.

In London, Brent crude was up 81 cents at $104.41 on the ICE Futures exchange.

Crude has dropped from $100 this week because of expectations Europe's debt crisis will trigger a recession next year and undermine global oil consumption. However, the U.S. economy has shown evidence of growth the last few months.

The government said that applications for unemployment benefits fell last week to the lowest level since May 2008. While manufacturing output fell last month after six straight months of steady gains, a regional report on Thursday showed manufacturing activity is rising this month in the Philadelphia area.

"We look for the oil market to move into a choppy, consolidation phase into the holiday period now that the euro appears to have stabilized for now amid a fresh flow of supportive U.S. economic guidance," energy consultant Ritterbusch and Associates said in a report.

The diplomatic standoff between the West and Iran and the prospect of sanctions further cutting into Iran's oil exports have helped keep a floor under crude prices.

"The feeble recovery is at risk from Europe's looming recession," said a report from JBC Energy in Vienna. "So far, oil prices have been supported by tight crude supplies and elevated geopolitical risk as tensions over Iran's nuclear program have risen."

In other energy trading on the Nymex, natural gas fell 0.2 cent to $3.125 per 1,000 cubic feet. Heating oil gained 1.31 cents to $2.8356 a gallon and gasoline futures added 3.08 cents to $2.5185 a gallon.

___

Alex Kennedy in Singapore contributed to this report.