By Rebekah Kebede
NEW YORK (Reuters) - Oil prices rose above $71 a barrel on Thursday, supported by better-than-expected economic data and a weaker U.S. dollar.
"A lower-than-expected unemployment figure in the U.S., resurgent commodities prices and a weaker U.S. dollar and Alcoa's return to profitability all helped push equities and oil prices higher," said Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut.
U.S. crude for November delivery rose $2.21 to $71.78 a barrel by 1:24 p.m. The contract closed $1.31 lower at $69.57 a barrel on Wednesday.
In London, Brent crude climbed $2.63 to $69.83.
Aluminum producer Alcoa
U.S. unemployment claims, which dropped to a nine-month low last week, also bolstered confidence that the labor market was stabilizing.
The dollar fell broadly against a basket of currencies as firmer equity markets fueled demand for riskier assets at the expense of the U.S. currency.
A weaker dollar supports oil because it makes commodities priced in the greenback cheaper for those holding other currencies.
But analysts urged caution over reading too much into positive economic data during the corporate earnings season as figures can be enhanced by spending cuts rather than increased revenue.
"I'm still a little bit skeptical about these results, but it looks like investors are going to look through that and are going to accept cost-cutting earnings for now," said CMC Markets analyst James Hughes.
The gains in crude oil futures on Thursday reversed a nearly 2 percent drop in the previous session, when U.S. government data showed a larger-than-expected build in gasoline and distillate stocks last week, fanning doubts over the pace of fuel demand recovery in the world's largest energy consumer.
The Energy Information Administration reported on Wednesday gasoline stocks rose by 2.9 million barrels last week, nearly three times the build that analysts had expected.
Distillate stocks, which include diesel and heating oil, rose by 700,000 barrels, more than double the forecast 300,000-barrel build.
(Additional reporting by Gene Ramos in New York and Joe Brock in London; Editing by Walter Bagley)
