The dollar fell after US data showed jobless claims rose unexpectedly last week and producer prices increased in March. "When the (producer prices) and the weekly job claims number came out we saw a reversal in the dollar and we saw a corresponding (rise) in oil prices," said Stephen Schork,

editor of The Schork Report, in Villanova, Pennsylvania.

Earlier, news that Sunoco had shut a gasoline-making unit at its 335,000-barrels per day Philadelphia, Pennslyvania, refinery after a small fire helped boost crude futures.

On Wednesday, US government data showed US gasoline stockpiles plunged 7 million barrels last week, the biggest weekly drop in more than 12 years, raising concerns about gasoline supplies ahead of the summer driving season.

In London, Brent crude oil fell ahead of the May contract's expiration, trading 53 cents lower at $122.35 a barrel, by 1:30 p.m. EDT (1730 GMT).

US crude for May delivery gained 79 cents at $107.90 a barrel.

Options on the US May crude contract also expire on the day, adding upward pressure as concentrations of calls are at a level above current prices.

First-time claims for US unemployment benefits rose unexpectedly last week while producer prices rose slightly faster than forecast in March from February. The dollar fell against a basket of currencies after the data.

"The spike in jobless claims back over 400,000 hit the dollar, which once again is supporting energy and precious metal prices. It's a troubling data point from an area that we thought some progress was being made," said John Kilduff, a partner at Again Capital LLC in New York.

Libyan rebels have said they are exporting a minimal amount of crude from fields pumping around 100,000 barrels per day, far less than usual production of 1.6 million bpd.

Elsewhere, oil market reaction to news that inflation in China accelerated faster than expected in March was muted. But China's first-quarter GDP figures and March consumer price data will be released on Friday will be scrutinized if there are signs growth getting out of control. That, analysts

said, could prompt further monetary tightening and potentially affect oil demand.