Crude oil prices rose Wednesday as investors cashed in on a weakening US dollar and a mixed report on energy stockpiles in the United States, the world's biggest energy-consuming nation.
New York's main contract, light sweet crude for September delivery, climbed 55 cents from Tuesday's closing price to end at 71.97 dollars a barrel.
In London, Brent North Sea crude for September delivery jumped 1.23 dollars to 75.51 dollars to its the highest level since mid-October.
Analysts said the weakening of the dollar in recent days fueled the price rise.
Oil is priced in the US currency and becomes cheaper when the dollar falls.
The dollar is seen as a safe-haven currency and tends to do better during times of economic uncertainty, while the riskier euro has generally risen in recent weeks amid greater economic optimism.
"The dollar broke some technical levels and people are very excited and are rushing into commodities," said independent oil broker Ellis Eckland.
The euro had surged from 1.40 dollars last Friday to above 1.44 dollars Monday, climbing to its highest level since December at 1.4445 dollars amid growing hopes for recovery from the global recession.
On Wednesday, the euro however fell against the dollar on profit taking.
"The inventories numbers were a little bit negative but the traders are looking at the dollar, and they think that if the dollar goes lower, there will be a surge in oil prices," Eckland said. "But now there is oversupply."
The US Department of Energy (DoE) said Wednesday that American crude oil stockpiles soared by 1.7 million barrels in the week ending July 31, three times more than the average analyst projection.
Inventories of distillates, which include diesel and heating fuel, sank by 1.1 million barrels, instead of the 900,000-barrel increase expected.
Gasoline reserves fell by 200,000 million barrels, far less than the drop of 1.3 million barrels anticipated.
The oil market had rallied sharply earlier this week, driven by improved economic recovery prospects and a weaker dollar.
On Monday, New York crude struck 72.10 dollars -- a level last reached on June 16. On Tuesday, London Brent touched 74.36 dollars, which was last seen on October 15.
Looking ahead, the direction of crude futures prices would be dictated by global economic data especially that of the US economy, analysts said.
A survey by payrolls firm ADP showed Wednesday that the private sector shed 371,000 jobs in July, sharply lower than the preceding month but more than expected amid a severe and long recession.
The number of private nonfarm jobs that vanished last month exceeded the 350,000 forecast by most analysts.
The release of July unemployment data on Friday by the US Labor Department is among the key indicators this week, traders said.
"To maintain the 70-dollar level, we need more bullish developments that include an unemployment reading that is tepid and inventory levels that don't swell too much," said John Kilduff, senior vice president of energy at broker MF Global.
