NEW YORK--Oil rose nearly $2 to above $79 a barrel Thursday after news that the U.S. economy returned to growth in the third quarter, reviving expectations of an increase in fuel consumption.

U.S. crude oil futures rose $1.95 to $79.41 a barrel by 11:23 EDT. London Brent crude rose $1.76 a barrel to $77.62.

The figures showed that third-quarter U.S. gross domestic product grew at a rate of 3.5%, beating analysts' expectations for 3.3% growth.

In another sign that demand in the world's largest fuel consumer could rise, the number of U.S. workers filing new claims for jobless benefits dipped by 1,000 last week.

"The price depends very much on the economy of the U.S., which is the world's biggest oil user. It's pretty obvious, really," said David Jenkins, a director at Tradition.

Wall Street also rose Thursday, as corporate earnings topped expectations.

Analysts also said investors were pushing oil prices higher due to long-term expectations that rising energy demand will see crude markets tighten in the coming years.

Crude prices have more than doubled since the turn of the year, but are only around half the peak hit close to $150 a barrel in July 2008, when booming demand from powerhouses like China sparked fears supplies may struggle to keep up.

EYES STILL ON WEAK DOLLAR

Weakness in the U.S. dollar has been supporting commodity prices as investors turn to hard assets as a hedge against inflation. Dollar-priced commodities also become cheaper for holders of other currencies.

The dollar weakened against the euro Thursday, adding to four days of losses.

"Right now, we're in an environment which is a global market," said Michael Lewis, Deutsche Bank's head of commodity research. "You don't have diversification any more between equities, crude oil and the dollar."

But weak demand for oil is keeping a lid on price gains.

Wednesday, official weekly U.S. oil data showed a sharp increase in gasoline inventories and a slight rise in crude stocks. Total oil product demand dropped by about 3% from a year earlier.