Oil futures rose today, helped by a weak dollar, but crude retraced most of its gains after the US government reported another weekly build in US crude inventories despite strong refinery runs.

Brent crude's front-month contract was up 40 cents, or 1%, at $39.54 a barrel by 3.49pm Irish time.

Earlier, it rose 3% to a session high of $40.61.

US crude's front-month rose 30 cents, or 0.8%, to $39.58, reaching $39.85 earlier.

US crude inventories rose 2.3 million barrels in the last week, the US Energy Information Administration reported.

That was less than the 3.3 million-barrel build analysts had expected.

Still, oil bulls were disappointed because the build came even as refinery utilisation rates rose 2% to 90.4% of total capacity, the highest rate seasonally since 2005.

"The data poses a bit of a conundrum, in that crude stocks still increased so much despite strong refining runs and an apparent drop in imports," said Matt Smith, director of commodity research at New York-headquarter energy data provider Clipper Data.

Dominick Chirichella, senior partner, Energy Management Institute, New York, concurred. "Overall, I would categorize the report as more neutral than anything else."

Oil rose early, following share prices on Wall Street which hit 3-month highs.

Oil also got a boost from a weak dollar, which fell to a near two-week low, making oil and other commodities denominated in the greenback more attractive to users of the euro and other currencies.

Both Brent and US crude fell about 3% yesterday on concerns about swelling global oil supplies, including new output from Kuwait and Saudi Arabia.

Oil prices have risen about 50% over the past two months after major producers within and outside the Organization of the Petroleum Exporting Countries floated the idea of freezing production at January's highs.

Yesterday, Saudi Arabia and Kuwait, two of OPEC's biggest exporters, said they would resume production at the jointly operated 300,000-barrels-per-day Khafji field even with a meeting on the production freeze set for 17 April.

"The fact that the announcement comes so shortly before the meeting in Doha is a disastrous sign," said Commerzbank oil analyst Carsten Fritsch.

“After all, it gives the impression that the lip service paid to freezing oil production is nothing but hot air."