Oil rose by more than $1 on Thursday to trade above $61 a barrel, halting a six-session losing streak which has seen prices decline by 15 percent on concerns about the timing of any economic recovery.

Prices hit a seven-week low just above $60 a barrel the previous day on bearish U.S. oil data, which highlighted how weak demand is in the world's largest energy consumer.

U.S. diesel and heating oil stocks have swelled to their highest level in almost 25 years after jumping by 3.7 million barrels last week, data from the Energy Information Administration (EIA) showed.

U.S. light crude for August delivery rose $1.01 a barrel to $61.15 by 1229 GMT, having lost more than 4 percent on Wednesday.

London Brent crude gained $1.26 to $61.69 a barrel.

Oil was supported on Thursday by a bounce in equity markets and a softer dollar. Weakness in the dollar typically buoys commodity prices as they become cheaper for holders of other currencies.

After six days of relentless selling, crude is now over sold, MF Global analyst Edward Meir said.

The buy-side euphoria associated with the 'recovery trade' now clearly seems to have waned, Meir said.

The 15 percent drop in oil prices since the end of June was the longest and steepest decline so far in 2009. Prices had been rising since February, more than doubling from lows hit near $33, as traders started to price in an eventual recovery.

But many analysts cautioned prices had risen ahead of the real economy, with unemployment still climbing and global oil inventories mounting up.

The fragile state of the global economy dominated the annual G8 summit, with the United States, Japan, Germany, France, Britain, Italy, Canada and Russia acknowledging there were still significant risks to financial stability.

OPEC's 2009 World Oil Outlook has added to the gloom as it said world demand for oil may take years to recover from the slump in 2009 because of economic weakness and demand destruction.

The Organization of the Petroleum Exporting Countries (OPEC) said consumption of its crude will not return to 31 million barrels per day (bpd), the level it averaged in 2008, until 2013.

OPEC Secretary-General Abdullah al-Badri said on Wednesday oil prices -- trading just above $60 per barrel -- were comfortable, but were still below the $75 a barrel the producer group in May said could be achieved this year.

(Additional reporting by Maryelle Demongeot in Singapore; Editing by Anthony Barker)