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 Oil prices have held above $100 a barrel for more than a month, largely on the view that crude, gold and other hard commodities are effective hedges against a falling dollar and rising prices.
As the dollar has started to recover against the yen and euro, investors have been less prone to pour money into oil for reasons unrelated to supply and demand. Still, with long term prospects bleak for the U.S. currency, oil remains attractive as an investment.
Light, sweet crude for May delivery rose 88 cents to $104.71 a barrel by noon in Europe n the New York Mercantile Exchange.
The Nymex crude contract settled $1 lower in the previous session at $103.83 a barrel.
Prices, analysts say, remain caught between those that want to buy oil as a hedge against another reversal in the dollar and those saying slowing economies worldwide will cut demand for fuel and energy.
On Wednesday, the front-month crude futures contract gained nearly $4 after a report showed a bigger-than-expected fall in U.S. gasoline inventories.
Since the report, gasoline prices have led the market. The drawdown in gasoline inventories completely overshadowed a massive 7.3 million barrels increase in crude oil stocks. Traders are also focusing on the low refinery utilization of 82.4 percent, which suggests further stock tightening for motor fuel just ahead of the Northern Hemisphere summer driving season.
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 But Wednesday's inventory report also showed U.S. gasoline demand remains weak despite ticking slightly higher.
At the same time, analyst Stephen Schork suggested pressure on heating oil supplies, noting that a recent cold snap in parts to the U.S. led to "nationwide aggregate heating demand in the Great Lakes (that) was nearly 20 percent above normal."
By noon, heating oil futures had spiked by more than 3 cents to $2.9550 a gallon (3.8 liters).
This week the prognoses for global economic growth turned bleaker, with Federal Reserve Chairman Ben Bernanke Wednesday publicly raising the prospect of a U.S. recession for the first time. His comments prompted some investors to head back into oil on the view that his remarks indicated further interest rate cuts from the Fed
-- which would likely send the dollar plunging again.
Traders will be paying close attention to Friday's U.S. non-farm payrolls numbers for direction in the oil market into next week. Earlier Thursday, data from the Labor Department showed initial claims for jobless benefits last week surged to their highest level in more than two years, raising expectations for the third straight decline in payroll jobs.
Brent crude rose 63 cents to $103.15 a barrel on the ICE futures exchange in London.
Gasoline prices added less than a penny to fetch $2.7315 a gallon, while Natural gas futures slipped by more than 3 cents to $9.385 per 1,000 cubic feet.
[Associated Press; By GEORGE JAHN]
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