Crude oil edged higher this morning to just above $72 a barrel, on course for its first weekly rise since mid-August, supported by a softer dollar and gains in equities.
Equities markets rose around half a per cent in Asia, off early highs, which stripped some support from energy. In the past two months equities and oil have shown a very tight correlation.
A slide in the dollar to a one-year low against a basket of currencies after Chinese data came in stronger than expected lent strength.
The weakening greenback - down 2 per cent this week - has driven buying in dollar denominated assets like oil, but David Moore, a commodities economist at Commonwealth Bank of Australia said although further dollar weakness was likely, it would have a less pronounced influence on prices.
"Our forecast for currencies is for dollar depreciation -- a lot of that has occurred already and while depreciation has been an upside driver, that influence may be weakening," Moore said.
NYMEX crude for October delivery stood at $72.05 a barrel by 4.29am, up 11 cents from yesterday's settlement. Oil earlier touched $72.38 and prices are on track for the biggest weekly rise since the middle of August.
China's crude oil imports in August surged about 25 percent on the year to 19.6 million tonnes, near a record high, or around 4.6 million barrels per day, Reuters calculations based on official customs data showed.
Imports for the first eight months rose 7.4 per cent on year to 130 million tonnes.
The International Energy Agency raised its demand outlook and the US Energy Information Administration reported crude inventories fell 5.9 million barrels last week, four times greater than forecast in a Reuters poll.
"A lot of the information that came out yesterday was pretty bullish for oil but the price reaction was muted," CBA’s Mr Moore said.
"That is probably because we are back towards the higher end of the trading range and it's making people a bit cautious," he said.
Reuters