UPDATE 6-Oil higher on Algerian incident, supportive U.S. data
* Attack on Algerian gas facility raises geopolitical concerns
* U.S. housing starts, jobless claims data supportive
* Coming up: CFTC positions data 3:30 p.m. EST Friday
(Recasts with updated prices, market activity; changes dateline, pvs LONDON)
NEW YORK, Jan 17 (Reuters) - Oil prices rose on Thursday as the attack on an Algerian gas facility reinforced concerns about geopolitical risk to supply in the region, while upbeat U.S. economic data also supported petroleum futures.
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.
The standoff began when gunmen stormed the gas facility in OPEC-member Algeria on Wednesday morning and demanded a halt to a French military operation against fellow al Qaeda-linked Islamist militants in neighboring Mali.
"The incident underscores the danger of militants targeting energy operations in the region," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
"The economic data, the jobless claims at a five-year low and the strong housing starts report, caused some fresh buying and pushed crude higher," McGillian added.
U.S. initial jobless benefit claims fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008 and the largest weekly drop since February 2010.
Housing starts jumped 12.1 percent last month to a 954,000-unit annual rate, the highest level since June 2008.
Brent March crude rose 80 cents to $110.48 a barrel by 11:50 a.m. EST (1650 GMT), having traded from $109.45 to $110.89. The session peak was just short of the 100-day moving average at $110.96.
The Brent February crude contract expired on Wednesday, after gaining 31 cents to go off the board at $110.61 a barrel.
U.S. front-month February crude was up $1.10 at $95.34 a barrel, having traded from $93.80 to $95.71. The February contract expires on Tuesday.
The 14-day relative strength index, a technical indicator gauging momentum, was above 70 for U.S. crude, a signal of an overbought condition.
Brent's premium <CL-LCO1=R> to U.S. crude fell on Thursday, dropping under $15 a barrel comparing Brent and U.S. March crude contracts. The spread ended on Wednesday at $16.37 a barrel based on February contract settlements.
The spread has recently narrowed in anticipation that an expanded Seaway pipeline moving crude oil from the U.S. Midwest to the Gulf Coast will ease the glut of crude in the U.S. Midwest - especially at the Cushing, Oklahoma, delivery point for the U.S. oil futures contract.
Crude futures received support on Wednesday from a drop in U.S. crude stocks reported by the Energy Information Administration.
U.S. commercial crude inventories fell 951,000 barrels last week, the Energy Information Administration said on Wednesday, contrary to consensus expectations that crude stocks had increased.
Investors awaited China's GDP numbers due on Friday for more indications of prospects for oil demand.
The data is expected to show the pace of China's economic growth improved to 7.8 percent in the fourth quarter, according to a Reuters poll, snapping seven straight quarters of slowing expansion.
OIL'S RISK PREMIUM
The violent hostage situation in Algeria dropped natural gas flows to Italy just as demand for heating fuels was being stoked in Europe by cold temperatures.
British day-ahead gas prices on Thursday hit an 11-month high as freezing temperatures drove up demand.
Spanish oil company Cepsa started to evacuate personnel in Algeria following the attack and Repsol was monitoring the situation.
"The market certainly expects that most of the international oil companies will withdraw personnel from oil and gas fields, affecting production," Christopher Bellew, analyst at oil brokerage Jefferies Bache said.
(Reporting by Robert Gibbons in New York, Julia Payne in London and Ramya Venugopal in Singapore; Editing by David Gregorio)