Oil rose to its highest level in three weeks, nearing $78 a barrel,  as  signs of growing Chinese demand for energy and a cheerier Wall Street   boosted prices. 
Crude for August delivery rose 0.7% Monday and   climbed 1.2% Tuesday to finish at the highest level since June 28, at   $77.44 a barrel. But prices drifted 19 cents lower on Wednesday. The   rise tracked gains in the stock market, as investors welcomed   better-than-expected company earnings.
A report Tuesday, from the  International Energy Agency said that  China overtook the U.S. as the  world's biggest energy user last year,  and prospects for continued  growth and rising energy demand are strong. 
"Everyone  has been so  concerned about the U.S. economy, but the report on Chinese  demand  opened up traders' eyes to the idea that we shouldn't worry  about every  piece of economic data from the U.S., but instead take a  global view,"  said James Cordier, president of Liberty Trading Group. 
Oil   futures, which switched to the September contract Wednesday, continued   to climb for a third straight session early Wednesday, crossing $78 a   barrel. But prices slipped later in the day, after a government report   showed a surprise build in crude inventories. Still, they held above $77   a barrel. 
The Energy Information Administration reported that   crude stocks climbed by 400,000 barrels last week, surprising analysts   who were expecting inventories to fall by 1.6 million barrels, according   to a consensus estimate collected by energy information provider   Platts. 
Gasoline inventories and distillates, used to make heating  oil and gas, also rose more than expected.  
A  stronger dollar also  weighed on prices Wednesday. Crude oil, like other  commodities, is  priced in dollars, and a stronger greenback pressures  prices. 
Despite  the recent run, Cordier expects oil prices to  remain between $70 and  $80 a barrel, where they have been trading since  May. 
"The global  economy is strong enough to support prices above  $70, but without the  U.S. economy turning around -- stocks sustaining a  rally and  unemployment coming down -- oil prices won't be able to break  through  $80 a barrel," he said