Oil jumps 2 percent on economic data, dollar

The U.S. economy grew faster than initially thought at 5.9 percent versus 5.7 percent in the fourth quarter, a government report showed on Friday, raising expectations of higher fuel demand growth in the world's top energy consumer.

U.S. crude for April delivery rose $1.63 to $79.80 a barrel by 1:31 p.m. EST after falling $1.83 on Thursday. ICE Brent crude for April traded up $1.42 to $77.71 a barrel.

The GDP number was positive and the crude market was getting a little oversold yesterday. Even with the terrible economic news earlier in the week -- consumer confidence, housing stuff -- equities have been quite resilient, said senior market strategist Richard Ilczyszyn at Lind-Waldock.

U.S. stocks seesawed on Friday as the euro rallied against the U.S. dollar and data showed Midwest business activity expanding in February.

A weaker dollar tends to support oil prices as it makes it cheaper for holders of other currencies.

Oil markets have looked to equities and the broader economy for signs of a potential demand rebound as the world economy pulls out of recession.

Doubts over the pace of the global recovery and fears that demand has peaked from industrialized nations have tempered optimism in oil markets, with the International Energy Agency (IEA) saying there is more downside risk to demand than upside.

$80 CEILING

Prices have traded in a range between $69 and $84 a barrel since last October, but $80 a barrel is being reinforced as a key resistance level, analysts said.

Prices edged over $80 a barrel to hit a six-week high of $80.51 a barrel on Monday but have since retreated.

We are in a broad range and the top is around $80 a barrel, said oil trader Christopher Bellew at Bache Financial.

While some analysts thought snowstorms on the East Coast of the United States could boost heating demand and set a price floor, others said that weather was now a peripheral factor because of high stocks.

U.S. crude oil stockpiles rose more than expected last week by 3 million barrels to reach a total of 337.5 million barrels in the week ending February 19, data from the U.S. Energy Information Administration showed on Wednesday.

Ample supplies have also lessened the market impact of geopolitical tensions over OPEC member Iran's uranium enrichment program, analysts said.

Israel lobbied the United States on Thursday to promote crippling sanctions against Iran to curb its nuclear program, but the Obama administration said it did not want to hurt the Iranian people.

(Reporting by Edward McAllister; additional reporting by Gene Ramos and Robert Gibbons in New York, Emma Farge and Seng Li Peng in Singapore; editing by Jim Marshall)