Oil rose above $78 a barrel on Thursday, supported by a drop in U.S. distillate inventories despite a stronger U.S. dollar.

U.S. crude oil futures rose $1.45 to $78.78 a barrel, about 1.9 percent at 2:09 p.m. EST. Brent crude gained $1.31 to $77.58 a barrel.

The bottom line is that the Department of Energy report had a number of little kernels of bullish information, starting with the distillate draw being larger than expected, said Peter Beutel, president, Cameron Hanover, New Canaan, Connecticut.

Inventories of middle distillates, including heating oil, in the United States fell 2.9 million barrels last week, a report from the U.S. Energy Information Administration showed. That was nearly double analysts' forecasts for a 1.5 million barrel drop.

Heating oil stocks fell 1.4 million barrels as a chilly weather on the Eastern seaboard increased demand for the fuel, the EIA data showed.

Crude oil and gasoline inventories rose 3.1 million barrels and 1.7 million barrels, respectively, which were larger than analysts' forecasts, according to the EIA.

There is also the seasonal factor in that people are looking at the upcoming driving season and that's helping boost gasoline, said Richard Ilczyszyn, senior market strategist, at Lind-Waldock in Chicago.

Oil prices were also supported by news that workers at Total's six French oil refineries extended their strike action into a second day on Thursday, protesting the potential permanent closure of one of the plants.

They will halt production five other refineries in the next 24 hours, sources told Reuters.

Total is a major European gasoline exporter to the United States.

The dollar rose against the euro as concerns about the outlook for the euro zone continued to pressure the euro.

The greenback has fallen earlier, pressured by a government report showing an unexpected jump in weekly jobless claims.

However, the rise in the dollar failed to pressure oil prices. A stronger greenback typically depresses oil prices as it makes it more expensive for investors to buy dollar-denominated commodities, such as oil.

Wall Street rose slightly after the Philadelphia Federal Reserve survey showed higher-than-expected growth in February, offsetting Wal-Mart Stores Inc's disappointing outlook.

(Additional reporting by Robert Gibbons and Gene Ramos in New York, Ikuko Kurahone in London, Seng Li Peng in Singapore; Editing by Marguerita Choy)