Oil prices rose above $71 a barrel Thursday as investors weighed evidence of weak U.S. crude demand against the effects of a falling dollar.
By early afternoon in Europe, benchmark crude for January delivery was up 36 cents to $71.03 in electronic trading on the New York Mercantile Exchange. The contract dropped $1.95 to settle at $70.67 on Wednesday.
Oil has fallen about 13 percent since reaching its 2009 high of $82 a barrel in October as traders mull evidence that U.S. demand for crude and its products remains weak despite an overall economic recovery.
"The latest oil consumption figures in large parts of the world are still far off from indicating a recovery, despite all the upward revisions of GDP outlooks," said analysts at JBC Energy in Vienna, noting that demand for diesel fuel was weaker than for gasoline.
"While private driving only suffered a limited impact from the recession, lower trade and industrial activities are weighing more heavily on gas oil requirements," JBC said.
On Wednesday, the Energy Department's Energy Information Administration said U.S. consumption of petroleum products fell to its lowest level since the week of July 10.
The recent price drop reflects an "increasing focus on underlying bearish oil supply and usage balances that are showing little sign of improvement," Galena Illinois-based Ritterbusch and Associates said in a report.
Oil prices were supported, however, by a rebound of the euro and the British pound against the dollar. When the greenback falls, oil priced in dollars becomes cheaper for investors holding other currencies.
On Thursday, the euro was up to $1.4739 from $1.4714 in New York late Wednesday, while the British pound rose to $1.6296 from $1.6248.
In other Nymex trading in January contracts, heating oil rose 1.57 cents to $1.9250 while gasoline gained 1.24 cents to $1.8697. Natural gas jumped 5.9 cents to $4.957 per 1,000 cubic feet.
In London, Brent crude for January delivery rose 46 cents to $72.85 on the ICE Futures exchange.
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Associated Press writer Alex Kennedy in Singapore contributed to this report.
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