Oil prices extended this week's robust gains on Thursday, buoyed by weakness in the U.S. dollar and gains on the stock market.

U.S. crude rose 23 cents at $72.74 a barrel by 1545 GMT, bringing it up 5.6 percent in three days. London Brent futures rose 22 cents to $71.89.

Purchases from the large speculators are still evident on even minor price pullbacks as strong equity markets and new lows in the dollar continue to generate enough upward momentum, Jim Ritterbusch, president at Ritterbusch & Associates said in a note.

The dollar fell broadly on Thursday, hitting a fresh one-year low against the euro as expectations of an economic recovery encouraged investors to seek higher-yielding assets.

A weaker dollar can fuel purchases of oil and other dollar-denominated commodities, as they become relatively less expensive to nondollar holding investors.

Wall Street, meanwhile, climbed into positive territory after a report showed the number of U.S. workers filing new claims for jobless benefits unexpectedly fell by 12,000 last week.

Oil has tracked equities markets closely in recent months as dealers look to stocks as a leading indicator of an economic recovery that could boost ailing energy demand.

But analysts said weak fundamentals continued to limit oil's price gains.

The U.S. Energy Information Administration said on Wednesday that inventories of distillates in the world's top energy consumer rose more than expected last week to their highest since 1983.

Gasoline inventories also rose, while crude stockpiles fell as refiners ran their plants near 90 percent of capacity to produce fuel, according to the weekly report.

We see no current physical tightness or even an imminent shift to a supply/demand deficit to help push the market higher, said Citi analyst Timothy Evans in a research note, adding, Some of the barrels have simply been moved downstream.

(Reporting by Richard Valdmanis; Additional reporting by Sambit Mohanty and Emma Farge; Editing by Marguerita Choy)

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