Oil prices rose to near $80 a barrel Wednesday as the effects of a weaker dollar trumped a report pointing to a rise in U.S. oil inventories.

By mid-afternoon in Europe, benchmark crude for December delivery was up 87 cents to $79.92 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 38 cents to settle at $79.05 on Tuesday.

Prices were also supported by a report from the Organization of the Petroleum Exporting Countries, which revised its estimate for 2010 global demand growth to 750,000 barrels per day, up slightly from its 700,000 barrels per day estimate the previous month.

At the same time, OPEC warned that doubts about the economic recovery along with higher oil prices "could dampen world oil demand in the coming year."

OPEC — supplier of about 35 percent of the world's crude oil — now sees 2010 demand at 85.07 million barrels a day.

Analysts said changes in the price of oil were mostly tied to how global stock markets were doing and the dollar's fluctuating exchange rate.

"This has nothing do to with any oil supply and demand fundamentals," said Olivier Jakob of Petromatrix in Switzerland.

Late Tuesday, a survey from the American Petroleum Institute showed a rise in U.S. oil inventories last week. Crude stocks increased 1.2 million barrels while analysts had expected a rise of 1.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration — the market benchmark — is scheduled to release its supply data on Thursday.

Crude traders were watching the dollar closely, as a weaker U.S. currency makes oil cheaper for investors buying the commodity with non-dollar currencies.

The euro rose to $1.5027 from $1.4978 late Tuesday in New York.

"Crude prices continue to be driven by the dollar and sentiment," Societe Generale analysts said in a report. "The dollar will be, on balance, moderately bullish for crude oil prices."

Crude has bounced near $80 a barrel for the last few weeks as traders eyed mixed U.S. economic data and the threat of Ida, a one-time hurricane in the Gulf of Mexico that weakened significantly before reaching oil installations near the Gulf Coast on Tuesday.

"The reaction to the data and events has been knee-jerk in nature, and not well thought out by market participants," the Societe Generale analysts said.

Oil has risen from $32 a barrel since December, and some analysts expect the upward trend to continue.

In other Nymex trading, heating oil was up 1.67 cents at $2.0690 a gallon. Gasoline for December delivery rose 1.26 cents to $1.99 a gallon, while natural gas for December delivery was down 1.2 cents at $4.455 per 1,000 cubic feet.

In London, Brent crude for December delivery rose $1.04 to $78.54 on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.