Oil near $126 a barrel, eyes dollar

By Jane Merriman

LONDON (Reuters) - Oil rose on Thursday, boosted partly by weakness in the dollar versus the euro after strong economic growth data from France and Germany.

U.S. crude was up $1.55 a barrel at $125.77 by 3:10 p.m.

London Brent, whose nearby June contract expires later on Thursday, was up 92 cents at $122.78.

Oil had retreated on Wednesday from a record high near $127 a barrel reached in the previous session, pressured by U.S. government data that showed a bigger-than-expected rise last week in distillate stocks.

The data eased concern about a tightening distillates market that has sent heating oil futures to record highs this week.

Strength in the euro against the dollar helped prices recover.

The dollar was further undermined by data showing U.S. industrial production fell 0.7 percent in April, reflecting the biggest drop in the manufacturing sector since September 2005.

Oil and the U.S. currency have become closely intertwined in recent months as investors have turned to oil as a hedge against the falling dollar.