Oil prices rise in volatile trade

US crude oil prices rose overnight in volatile trading as the weak dollar and positive euro zone and German economic data provided lift before a Wall Street reversal helped limit oil's rise.

Crude futures, attempting to break a two-day string of lower settlements, ran into resistance near US$79 a barrel after rallying US$1.90 to US$78.89 a barrel.

Oil futures retreated from session highs, pressured as US equities turned negative.

US crude for September delivery rose 77 cents to US$77.76 a barrel at 12:51 p.m. EDT (1651 GMT), trading from an early low of US$76.45 to a peak of US$78.89.

ICE Brent rose US$1.03 to US$77.09 a barrel, having traded from US$75.60 to US$78.16.

"The dollar's weakness pushed crude higher and triggered some (buy) stops, but it ran into resistance and stalled just below US$79 and the stock market fell back and that helped pull oil back also," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.

The euro hit a 12-week high against a broadly weaker dollar, lifted by data showing euro zone economic sentiment jumping to a 28-month high, while German unemployment declined for the 13th consecutive month.

Also supportive was news that US 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, adding lift.

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 Aug. 14, adding another bullish element.

The bullish news helped offset Wednesday's US Energy Information Administration inventory report that said commercial crude oil stocks rose 7.31 million barrels last week as imports jumped.

FOCUS ON 200-DAY MOVING AVERAGE

Despite Thursday's rise, oil has been trading within a US$70-US$80 range for nearly two months.

The front-month US crude contract rose above its 200-day moving average, pegged at US$77.77, before stalling short of US$79 a barrel.

On Tuesday, before ending nearly 2 percent lower, crude prices rose to US$79.69, eclipsing last Friday's peak of US$79.60 to post the highest front-month crude price since US$80.39 was struck on May 6.

Continued signs of tepid economic recovery and oil demand growth, along with the hefty inventories, have helped keep oil prices in check.

US oil demand in May was revised down by 4.21 percent to 18.827 million bpd from an earlier estimate of 19.655 million bpd, the US EIA said on Thursday.

Lower durable goods orders in the United States weighed on crude oil prices on Wednesday, along with the Federal Reserve's Beige Book summary of national economic conditions, based on information before July 19, pointing to a less-than-booming recovery.

Helping to add to the inventory rises, Opec is meeting only half its promised cuts in oil supply this month, a Reuters survey showed on Thursday - the lowest rate of observance since the current targets were adopted in December 2008.

- Reuters