Oil prices hovered around $72.50 a barrel on Thursday after rising more than 5 percent this week as swollen U.S. distillate stocks such as diesel offset a weaker dollar and rallying equities.
U.S. crude was up 13 cents at $72.64 a barrel by 1438 GMT, after falling as low as $71.66 earlier.
London Brent Futures were down 6 cents at $71.61 a barrel.
U.S. stocks hit session highs after data showed factory activity in the U.S. Mid-Atlantic region rose in September to the highest level since June 2007.
Weakness in the dollar helped limit oil losses on Thursday as it hit a new 2009 low against the euro on Thursday as investors shifted money to riskier assets such as equities.
Purchases from the large speculators are still evident on even minor price pullbacks as strong equity markets and new lows in the dollar continue to generate enough upward momentum, said Jim Ritterbusch in a note by his firm Ritterbusch & Associates.
Oil prices tend to rise when the dollar falls because a weak dollar can make it cheaper to buy oil and other dollar-denominated commodities.
The number of U.S. workers filing new claims for jobless benefits unexpectedly fell by 12,000 last week data showed on Thursday, lending support to prices.
But analysts said weak fundamentals neutralized the potentially bullish news from other markets as traders eyed brimming distillate stocks, which could limit any price gains during the peak demand heating season.
U.S. Energy Information Administration data on Wednesday showed distillates rose by 2.2 million barrels last week, exceeding analyst expectations for a 1.3 million barrel build.
And while crude stocks fell by more than expected last week, analysts said this was because of higher refinery utilization rates rather than a genuine pick-up in demand.
We see no current physical tightness or even an imminent shift to a supply/demand deficit to help push the market higher, said Citi analyst Timothy Evans in a research note, adding, Some of the barrels have simply been moved downstream.
Gasoline stocks rose by 500,000 barrels in the same period.
(Additional reporting by Sambit Mohanty; editing by Keiron Henderson)