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(Reuters)
By Ikuko Kurahone
LONDON (Reuters) - Oil rose more than a dollar to over $78 on Thursday after news that the U.S. economy returned to growth in the third quarter, reviving expectations for an increase in fuel consumption.
The figures showed that third-quarter U.S. gross domestic product grew at a rate of 3.5 percent, beating analysts' expectations for 3.3 percent growth.
In another sign that demand in the world's largest fuel consumer could rise, the number of U.S. workers filing new claims for jobless benefits dipped by 1,000 last week.
U.S. crude oil futures rose $1 to $78.46 a barrel by 9:28 a.m. EDT after earlier hitting a high of $78.86. London Brent crude rose 93 cents to $76.79.
"The price depends very much on the economy of the U.S., which is the world's biggest oil user. It's pretty obvious really," said David Jenkins, a director at oil inter-dealer broking company Tradition.
Analysts also said investors were pushing oil prices higher due to long-term expectations that rising energy demand will see crude markets tighten in the coming years.
Crude prices have more than doubled since the turn of the year, but are only around half the peak hit close to $150 a barrel in July 2008, when booming demand from powerhouses like China sparked fears supplies may struggle to keep up.
DOES A WEAK DOLLAR TRUMP WEAK DEMAND?
Weakness in the U.S. dollar has been supporting commodity prices, as investors turn to hard assets as a hedge against inflation. Dollar-priced commodities also become cheaper for holders of other currencies.
The dollar weakened against the euro on Thursday, adding to four days of losses.
"Right now, we're in an environment which is a global market," said Michael Lewis, Deutsche Bank's head of commodity research. "You don't have diversification any more between equities, crude oil and the dollar."
But weak demand for oil is keeping a lid on price gains.
On Wednesday, official weekly U.S. oil data showed a sharp increase in gasoline inventories. Total oil product demand dropped by about 3 percent from a year earlier.
(Additional reporting by David Sheppard, Barbara Lewis and Emma Farge in London and Fayen Wong in Perth; editing by Anthony Barker)
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