LONDON (Reuters) - Oil rose above $67 a barrel on Thursday after a 3.5 percent decline the previous day, boosted by forecasts of higher oil prices from U.S. investment bank Goldman Sachs (GS.N).
U.S. crude for July delivery rose $1.10 to $67.22 a barrel by 1135 GMT. London Brent crude gained $1.43 to $67.31.
Further support for oil prices came from a weaker U.S. dollar, which can boost the appeal of oil and other commodities as a hedge against inflation.
"For the better or for the worse, a switch in the Goldman price forecast rarely does not have a price influence and we will need to take it as a market input for the next few days," said Petromatrix analyst Olivier Jakob.
Goldman Sachs raised its end of 2009 oil price forecast to $85 a barrel from $65 and introduced a new end of 2010 forecast of $95.
"The recent rally in WTI (U.S. crude) prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity," Goldman said in a research note.
Oil closed down more than $2 on Wednesday following a report by the U.S. Energy Information Administration that U.S. crude inventories rose 2.9 million barrels, against expectations for a decline of 1.4 million barrels in a Reuters poll.
Saudi Oil Minister Ali al-Naimi has said the producer group OPEC would wait until crude inventories fall to around 53 days of forward cover before considering raising output, nearly 10 days below current levels.
London's FTSE 100 share index .FTSE turned lower on Thursday after the Bank of England kept interest rates unchanged at a record low of 0.5 percent. European shares were higher ahead of the European Central Bank's own rate decision.
The latest signal on the state of the U.S. economy will come from employment data due on Friday.
U.S. non-farm payroll jobs likely fell by 520,000 jobs last month, the smallest number in seven months, a Reuters poll showed, but economists expect the U.S. unemployment rate to rise to 9.2 percent in May, the highest since September 1983.
