SINGAPORE, Oct 11 (Reuters) Oil prices firmed on Thursday, extending gains above $81 as dealers braced for a possible decline in US winter fuel stocks and factored in a disruption in crude production in Alaska.
U.S. crude rose 16 cents to $81.46 a barrel by 0147 GMT, after gaining more than $1.04 on Wednesday. London Brent crude rose 19 cents to $78.79.
Oil is hovering near its highest in two weeks, with heating oil futures leading recent gains as traders grow worried that global oil inventories may be insufficient to meet heating fuel demand in the coming northern hemisphere winter.
U.S. weekly oil inventory data due out later in the day Thursday are expected to show a 400,000-barrel decline in distillate stocks, which includies heating fuel. European oil inventories fell in September, data showed this week.
Crude inventories are expected to have risen by 900,000 barrels while gasoline stocks edge up by 100,000 barrels.
Renewed U.S. dollar weakness added to the latest gains. The dollar slipped again on Wednesday, weighed down by expectations the U.S. Federal Reserve will have to cut interest rates again this year to help recharge the U.S. economy.
It steadied on Thursday, but remains near an all-time low against the euro, a factor that has spurred buying in dollar-denominated commodities markets as a hedge.
''The weakening of the the U.S. dollar is continuing to attract funds into energy and commodities,'' said Jim Ritterbusch president at Ritterbusch and Associates.
Crude oil prices rose a day ago after British oil company BP said that a fire at its vast Prudhoe Bay oil field in Alaska will force it to shut-in 30,000 barrels of daily production for two weeks.
Oil prices have been holding around the $80 mark since striking a record $83.90 in mid-September, shrugging off OPEC's pledge to add 500,000 bpd more oil to the market next month.
Top exporter Saudi Arabia made good that pledge on Thursday, telling top Asian customers that it would increase their sales by about a tenth, although European refiners said on Wednesday that they will not get additional oil.
Tensions between Turkey and Iraq also helped lift crude, dealers said. Turkish Prime Minister Tayyip Erdogan confirmed Wednesday his government was drawing up plans to authorise a strike on Kurdish rebels in northern Iraq. [ID:nWBT007693] REUTERS ARB KP0930