Oil rose further over $71 a barrel on Thursday, buoyed by weakness in the dollar and bullish data on Chinese and U.S. crude inventories.

U.S. crude rose 45 cents to $71.48 a barrel by 0845 GMT, while Brent crude gained 55 cents to $71.40.

Recently, the oil market is looking more at the correlation between the euro and the dollar, said Ryuichi Sato, an analyst at Tokyo-based Mizuho Corporate Bank.

The dollar fell toward $1.40 against the euro after tame U.S. inflation data dampened speculation the Federal Reserve would raise interest rates by year-end.

A weaker dollar makes oil and other commodities cheaper for holders of other currencies.

Oil prices have been trading in a tight range around $70 a barrel over the past week, as investors assess whether the rally which has seen prices more than double since February can continue.

Many analysts, including Sato, are eyeing a key price target of $76 a barrel, established last year when oil crashed from record highs near $150 a barrel in July to lows close to $30 a barrel at the turn of the year.

Tentative signs of an economic recovery, which will likely boost demand for oil, saw prices rise to an 8-month high above $73 a barrel last week. But growing concerns prices have risen too quickly has seen the rally stall, with demand still depressed by the recession.

SIGNS OF RECOVERY?

China oil data provided some support for prices on Thursday, with May diesel exports falling to 390,000 tonnes after hitting a record 510,000 tonnes in April, as oil firms kept more fuel at home on rising sales and falling stockpiles.

The bullish Chinese customs data came as the World Bank raised its forecast for gross domestic product growth this year for the world's third-largest economy to 7.2 percent from the 6.5 percent projected in its previous quarterly report in March.

The World Bank said a massive policy stimulus should enable China to keep growing at a respectable rate this year and the next, but a robust recovery was unlikely given global weakness and softness in non-government investment.

Growing demand for oil from emerging economies like China and India was one of the main reasons prices spiked to record highs last year, before the economic crisis crimped consumption across the globe.

Demand is certainly lower than last year but there are tentative signs of improvement, analyst Andrey Kryuchenkov at VTB Capital in London said.

In another positive sign for oil, the U.S. Energy Information Administration (EIA) reported a much higher than expected fall in crude stockpiles in the week to June 12, by 3.9 million barrels.

Gasoline demand in the world's top consumer rose over the last four weeks according to the EIA, boosted by lower prices at the pumps compared to last year.

But demand for oil products as a whole was still down 6 percent year-on-year as the recession has slashed demand for more industrial fuels like diesel, heating oil and jet fuel.

(Additional reporting by Chua Baizhen in Singapore; Editing by William Hardy)

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