Oil prices rose slightly to near a seven-week high Thursday, as optimism for economic recovery and rising fuel demand outweighed a rise in new U.S. jobless claims.
U.S. crude for September delivery, which expired at Thursday's close, settled 12 cents higher at $72.54 a barrel. Crude prices earlier rose to $72.88, the highest level since June 30. October Brent futures settled down $1.26 a barrel at $73.33.
Oil markets have been tracking stocks and the U.S. dollar, as well as broad economic indicators, for signs a recession may soon end, which could foreshadow rebounding fuel demand.
The S&P 500 stock index rose more than 1 percent and the dollar fell 0.13 percent against a basket of foreign currencies.
The index of U.S. leading economic indicators rose for a fourth month in July, by 0.6 percent, signaling that a recession is abating.
The number of U.S. workers filing new claims for jobless benefits last week unexpectedly rose to 576,000 from 561,000 the week before.
It looks like the oil rally has stalled and we're consolidating in the $72 a barrel range, said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Crude prices have risen from lows below $33 a barrel in December amid hopes for an economic rebound.
The crude price rise was also supported by a 4.5 percent surge in Chinese stocks Thursday, with investors drawn to attractive valuations after a 20 percent plunge in Chinese shares over the previous two weeks.
Oil prices had already jumped 4.7 percent on Wednesday, when data from the U.S. Energy Information Administration showed an unexpected steep drop in U.S. crude stocks last week.
As yet, there are few indications of recovering U.S. fuel demand. Freight traffic across North America fell 17.9 percent in the week ended August 15 from the same 2008 week, a trade group said on Thursday in a weekly report.
Oil markets were also starting to focus on the Organization of the Petroleum Exporting Countries' September 9 meeting, where the producer group was expected to leave output targets unchanged, according to delegates and analysts.
OPEC last year agreed to a series of output cuts to help stem the sharp decline in oil prices.
In addition, traders focused on more efforts by financial regulators in the U.S. and Europe to stem violent oil price swings.
The United States Commodity Futures Trading Commission and the United Kingdom's Financial Services Authority said they have agreed on steps to strengthen cross border supervision of energy futures markets.
The measures could prompt more reporting on the aggregate positions held by crude oil traders on both U.S. and British exchanges, analysts said.
(Additional reporting by Robert Gibbons in New York, Emma Farge and David Sheppard in London and Jennifer Tan in Singapore; Editing by Marguerita Choy)