NEW YORK – Oil prices surged Wednesday, boosted by positive US economic data signaling recovery from recession that would spur demand, as well as a decline in the dollar.

New York's main contract, light sweet crude for January delivery, vaulted $1.94 to $77.96 a barrel, more than wiping out a hefty $1.54 loss Tuesday.

In London, Brent North Sea crude for January delivery gained $1.98 to settle at $77.45 a barrel.

Analysts said the market gained support from a series of economic data that indicated the United States, the world's largest energy consumer, was emerging from recession.

"The overwhelming (market) sentiment was based on the economic news," said Andy Lipow, analyst at Lipow Oil Associates.

Lipow noted that oil prices had risen after the US government reported initial unemployment insurance claims fell, and on the back of "a weaker dollar."

New US jobless claims fell in the week ending November 21 to an adjusted 466,000, the lowest level since September 2008.

A separate report showed consumer spending rose more than expected in October, and a third report said sales of new homes rose to their strongest pace since September 2008.

The US Department of Energy reported that stockpiles of distillates, including heating fuel, dropped by 500,000 barrels in the week to November 20, instead of the rise of 500,000 barrels expected by most analysts.

"The fall in the demand that we’ve seen over the last year has abated, and we’re going to see increases in demand that will increase the price of oil," Lipow said.

The jump in dollar-priced oil came as the US currency fell to a 15-month low against the euro, which hovered near $1.51. A weaker dollar makes oil cheaper for buyers with stronger currencies.

The US markets will be closed Thursday for the Thanksgiving Day holiday.

Traders digested comments from Algeria's energy minister who said OPEC was likely to maintain its production levels when cartel ministers meet in Luanda, Angola, on December 22.

"We are going to keep the same output level until we have a clearer vision of the world economic situation," Chakib Khelil said in a report carried by the APS news agency.

Khelil said oil prices were not determined only by supply and demand. Exerting greater influence were "more optimistic projections" for global economic momentum.

"Most people think the economy is going to improve, that demand will pick up and that prices will strengthen," he said.

As a result, dealers are buying oil now in order to be able to sell at higher prices in the next few months.

"But if things do not go well, they will start to get rid of this oil very quickly," he predicted.