Oil prices rose on Thursday as the dollar weakened to a 12-week low against the euro, boosting demand for oil priced in dollars, and after European data showed eurozone economic sentiment has improved.
Oil prices rose in spite of a volatile day in U.S. stock markets, in which equities gained early, then dipped in afternoon trade before closing slightly higher. .N
U.S. crude rose for the first time in a week, gaining $1.37 a barrel to settle at $78.36. ICE Brent rose $1.53 to $77.59 a barrel.
Today's move seems mostly due to a weaker dollar, said Summit Energy analyst Matt Smith. It's also a technical move, since oil has been bouncing around in the $76 to $80 range, and found support near the bottom of the range.
Oil retreated from a session high near $79, after U.S. equities markets dipped in afternoon trade.
The euro hit a 12-week high, lifted by data showing euro zone economic sentiment jumped to a 28-month high and German unemployment declined for a 13th month.
A weaker dollar can boost demand for oil by making it cheaper for holders of foreign currencies like the euro.
Also supportive was news that U.S. initial jobless claims fell in the week to July 24.
Oil product stocks held in the Amsterdam-Rotterdam-Antwerp storage hub fell across the board in the week ending Thursday.
Consultancy Oil Movements said seaborne oil exports by OPEC, excluding Angola and Ecuador, will fall by 370,000 barrels per day in the four weeks to August 14, adding another bullish element.
The data helped to offset bearish sentiment after Wednesday's U.S. Energy Information Administration inventory report said U.S. commercial crude oil stocks unexpectedly rose 7.31 million barrels last week.
FOCUS ON 200-DAY MOVING AVERAGE
Oil has been trading in the $70-$80 range for nearly two months. Crude has come close to breaking through $80, but has often fallen sharply when it fails to breach the range.
On Tuesday, for instance, oil ended 2 percent lower after reaching an 11-week high of $79.69 in intraday trade. (Graphic: link.reuters.com/xat99m )
Signs of tepid economic recovery and oil demand, along with hefty inventories, have helped keep prices in check.
OPEC is meeting only half its promised cuts in oil supply this month, a Reuters survey showed on Thursday. That was the lowest rate of observance since the current targets were adopted in December 2008.
U.S. oil demand in May was revised down by 4.21 percent to 18.8 million bpd from an earlier estimate of 19.7 million bpd, the U.S. EIA said on Thursday.
(Additional reporting by Robert Gibbons in New York, David Turner in London and Alejandro Barbajosa in Singapore; Editing by David Gregorio)