NEW YORK (Dow Jones)--Crude futures settled sharply higher Thursday as the pace of the U.S. economic recovery quickened.

Light, sweet crude for December delivery settled $2.41, or 3.1%, higher at $79.87 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled $2.18, or 2.9%, higher at $78.04 a barrel.

Crude futures made a beeline for $80 a barrel after the U.S. Commerce Department reported a 3.5% increase in third-quarter gross domestic product, more than economists had expected.

The growth report instantly drew investors out of the dollar, a safe haven when the outlook is uncertain, and back into equities and commodities, riskier asset classes that tend to rise and fall with the state of the wider economy. Money had flowed in the other direction for most of the week.

At the time oil prices settled, the dollar had fallen by 1% to $1.4857 per euro, while the Dow Jones Industrial Average had catapulted nearly 200 points higher to 9953.

"The GDP number ... lit a fire back under the Dow and the investment money came rushing back into commodities," said Darin Newsom, senior analyst at DTN, a market information service in Omaha, Neb.

The rally could have a short shelf life if oil prices head too far above $80 a barrel. Although oil prices were boosted by the GDP figure on Thursday, data released over the last few months have already established the third-quarter recovery didn't translate into a significant improvement in U.S. oil demand.

Oil and fuel inventories were also nearly unchanged between the start and end of the quarter, and prices kept to a tight range around $70 a barrel for most of the same period.

Barring an unexpected jump in demand, crude inventories are expected to keep rising over the next few months as U.S. refiners cut back on fuel production in an attempt to reduce the surplus.

Recent trading may have established a new equilibrium for prices around $80 a barrel while the market waits for inventories to dwindle. The oil market had backed off a one-year high above $81 a barrel last week, falling in four out of the next five sessions before the GDP figure abruptly ended the decline.

"A lot of people were on the sidelines waiting for a broader correction, and now [there is] a belief that maybe the correction's over," said Andy Lebow, senior vice president for energy at MF Global in New York.

Front-month November reformulated gasoline blendstock, or RBOB, settled 3.26 cents, or 1.6%, higher at $2.0190 a gallon. November heating oil settled 5.73 cents, or 2.9%, higher at $2.0542 a gallon.

-By Brian Baskin, Dow Jones Newswires; 212-416-2453;