Oil was steady on Thursday, trading near seven-week highs around $81, as U.S. demand

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rebounds with a recovering economy, and a weaker dollar helped whet investors' appetite for risk.

Total oil demand in the world's top consuming nation grew 0.3 percent in the past four weeks from a year earlier, U.S. government data showed on Wednesday, raising expectations for an end to a 1-1/2-year period of sustained consumption decreases.

U.S. April crude held on to Wednesday's gains of more than $1, but was trading down 9 cents at $80.79 a barrel by 0311 GMT. The front-month contract touched $81.23 on Wednesday, its highest intraday price since Jan. 12. London ICE Brent for April fell 2 cents to $79.23.

A weaker dollar also contributed to Wednesday's gains, after Greece's budget-balancing pledges helped restore some appetite for risk. On Thursday, the spotlight focuses again on the euro zone, which will report revised gross domestic product for the fourth quarter.

"The oil market will trade in a range of $75 to $85 at least for the next two months, and it will possibly go above $85 by the middle of this year, depending on economic recovery," said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan.

Prices have ranged $69 to $84 a barrel over the past few months amid uncertainty about the pace of economic recovery. But a decline in global crude inventories and the surplus held in floating storage has set the stage for an increase towards the $80-$90 range, according to Barclays Capital.

Interest rate decisions from the Bank of England and the European Central Bank are also expected on Thursday, followed by U.S. durable goods and factory order statistics for January. And on Friday, attention will turn to U.S. non-farm payrolls.

Some doubts remained about the pace of economic recovery. Newedge's Hasegawa said it is still "slow," adding that further oil price gains could be triggered by "short-covering" when prices reach $81.50 and $82. U.S. crude inventories last week rose a larger-than-expected 4.1 million barrels, the Energy Information Administration (EIA) said on Wednesday.

The dollar was little changed against a basket of currencies on Thursday after falling against the euro a day earlier as concerns eased about deficits in European countries. A weaker dollar tends to support oil prices, making dollar-denominated commodities cheaper for other currency holders.