Oil prices rose nearly 5 percent to a seven-month high above $69 a barrel on Thursday after U.S. data showed a fall in jobless claims, raising expectations of an economic recovery and increased demand for oil.
Oil was also supported by a forecast from U.S. investment bank Goldman Sachs that prices would hit $85 a barrel by the end of the year.
U.S. crude for July delivery rose $3.20 to $69.32 a barrel by 1:15 p.m. EDT (1715 GMT), the highest since early November. London Brent crude gained $3.14 to $69.02 a barrel.
The number of U.S. workers filing new claims for jobless benefits fell for a third straight week, government data showed on Thursday, indicating some loss of force in the pace of the job market's deterioration.
Oil prices rallied earlier after Goldman Sachs raised its oil price forecast for end of 2009 to $85 a barrel from $65 and introduced a new forecast of $95 for the end of 2010.
For the better or for the worse, a switch in the Goldman price forecast rarely does not have a price influence, and we will need to take it as a market input for the next few days, Petromatrix analyst Olivier Jakob said.
Oil closed more than $2 a barrel lower on Wednesday, following a report by the U.S. Energy Information Administration that U.S. crude inventories rose 2.9 million barrels, against expectations for a decline of 1.4 million barrels in a Reuters poll.
Saudi Oil Minister Ali al-Naimi has said the producer group OPEC would wait until crude inventories fall to around 53 days of forward cover -- nearly 10 days below current levels -- before considering raising output.
(Editing by Walter Bagley)