NEW YORK - OIL prices jumped above US$70 (S$105) a barrel on Thursday after the US government said that the economy may be faring better than previously thought.

In a revised reading on gross domestic product in the first quarter, the Commerce Department reported a 5.5 per cent annualised decline from January to March, rather than the 5.7 per cent it reported a month ago.

The slowing economy has slashed demand for energy as factories shut down and fewer people drive to work or take leisure trips by car or plane.

But it's thought to be shrinking at a slower pace this quarter, and refinery closures combined with ongoing political turmoil in oil producers Iran and Nigeria helped boost crude prices throughout the day.

Benchmark crude for August delivery added US$1.56 to settle at US$70.23 a barrel on the New York Mercantile Exchange.

In London, Brent prices increased US$1.45 to settle at US$69.78 a barrel on the ICE Futures exchange.

The value of the dollar again is playing a strong role in the price of crude.

Crude prices have fallen off after peaking above US$73 a barrel earlier this month as the dollar strengthened.

Most experts agree prices on Nymex, and at the local gas station, hit levels that weren't supported by meager demand for energy.

They blame investment money that has flowed into the market, using oil as a hedge against inflation. -- AP