Oil prices rose on Friday as data showing a big increase in Chinese demand, along with a weak dollar, offset persistent worries about the fiscal outlook for top energy consumer the United States.
Support also came from late short-covering ahead of the long U.S. Memorial Day holiday weekend, which will keep U.S. markets shut on Monday.
U.S. crude futures settled up 62 cents at $61.67 a barrel, while London Brent rose 85 cents to settle at $60.78 a barrel.
"We can say China oil demand news was supportive, but it appears the dollar falling to new lows for 2009 is providing the main support for crude this morning," said Tom Bentz, analyst at BNP Paribas Commodities Futures Inc in New York.
The U.S. dollar touched the lowest level this year on Friday, lifting commodities denominated in the greenback.
Oil prices have rallied around $4 this week, boosted by a spate of U.S. refinery problems and unrest in major oil exporter Nigeria, and are nearly double their lows hit over the winter on hopes the economic recession is easing.
Investment bank Goldman Sachs said the rise in prices this week was due to real oil market fundamentals, after weeks of rallies due to hedging against a weak dollar and equity market rallies.
U.S. stocks advanced on Friday on hopes that a weaker dollar would increase multinationals' profitability while Moody's reassuring comments eased some concerns about the U.S. credit rating. .N
The Nigerian military has launched its biggest campaign in years in the country's oil heartland, bombarding militant camps, which has sent fears of further supply disruptions from the West African country through oil markets.
In the United States, refinery fires pushed up gasoline prices ahead of the Memorial Day holiday this weekend, which kicks off the country's summer driving season.
In China, the world's second-largest energy consumer, apparent oil demand rose 3.9 percent in April from a year earlier, data showed on Friday. It was the first significant rise since October.
Oil traders were expected to shift their focus to next week when the Organization of the Petroleum Exporting Countries will meet to review its output policy on Thursday.
OPEC is expected to keep its official production levels unchanged as rising prices have eased pressure on budgets, and there are hints of economic recovery during the next year, a Reuters poll showed on Thursday.
