Oil firmed above $79 on Wednesday as a 15 month low in the dollar diverted investors' focus from fundamentals, with weekly U.S. government inventory data being delayed by one day to Thursday.
Analysts said strong Chinese oil demand and factory output also supported the market but the gain was capped by weak demand elsewhere and a relatively quick recovery of the U.S. oil industry after storm disruption.
U.S. crude futures were trading 35 cents up at $79.40 a barrel by 1057 GMT. Brent crude futures rose 43 cents to $77.93.
Only the dollar may push oil prices around. The Chinese manufacturing data was good, which is bullish. We are still in a hurricane aftermath, which is bearish, Andy Sommer, senior oil analyst with EGL Group, said.
The dollar on Wednesday hit its lowest in 15 months against a basket of currencies. <.DXY>
The delayed release of weekly oil figures from the U.S. Energy Information Administration (EIA) due to the Veteran's day holiday would further direct oil traders' focus to dollar moves, Sommer said.
EIA data is usually released on Wednesday, providing traders with clues of oil's fundamentals in the United States, the world's top oil consumer.
Analysts in a Reuters poll forecast the data would show a 600,000 barrel increase in U.S. crude inventories last week as refineries have been cutting back runs as weak demand batters margins.
Separate data from industry group American Petroleum Industry Association later on Tuesday showed increases in crude, gasoline and heating oil inventories.
In Europe, crude oil inventories rose in October as refiners reduced operation rates to match falling demand.
Oil products, mostly heating oil, for which storage cannot found on land, are floating in ships at sea. The volume is now about 90 million barrels, said ICAP shipping brokers, more than the world's daily oil consumption.
A monthly report by producer group OPEC, due later in the day, could also offer clues on the outlook for global oil demand.
Oil and natural gas companies operating in the Gulf of Mexico began returning workers evacuated ahead of Tropical Storm Ida and restoring shuttered output and ports.
Oil prices have risen about 77 percent so far this year, but are still 46 percent off their high of more than $147 a barrel struck in July last year.
While oil demand in many developed countries is seen falling this year, China showed robust demand growth. Its October crude oil imports and refinery runs rose to near record highs while its industry output growth surged to a 19 month high.
Oil producer group OPEC is unlikely to change the current output policy significantly when it meets next month, sticking with the existing output curbs, Qatar's oil minister Abdullar Al-Attiyah said.
(Additional reporting by Jennifer Tan in Singapore; Editing by Keiron Henderson)