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Nov. 23 (Bloomberg) -- Crude oil rose from a one-week low on speculation demand will increase as the global economy recovers from its worst recession since World War II.

A report today in the U.S., the world's largest oil user, may show existing-home sales rose 2.3 percent last month to their highest since July 2007, according to a Bloomberg News survey of economists. Oil also gained as investors bought physical assets on speculation U.S. efforts to restore growth will extend the decline in the dollar.

"The market's looking ahead in terms of recovery in demand for oil and products and there's also the currency element," said Toby Hassall, research analyst with CWA Global Markets Pty in Sydney. "The downward trend remains in the greenback."

Crude oil for January delivery rose as much as $1.01, or 1.4 percent, to $78.52 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $78.46 at 3:26 p.m. Singapore time.

The contract slipped 58 cents, or 0.7 percent, to $77.47 on Nov. 20, its lowest settlement in a week. Gains by the dollar and declining equity prices eroded investor confidence in the outlook for commodity demand and trimmed the contract's gain to 44 cents for the week.

The December contract expired on Nov. 20 down 74 cents, or 1 percent, to $76.72 a barrel. Oil traded between $82 and $74.79 the past five weeks after surging in early October.

Oil may need a "significant downward thrust" in the dollar to break higher, Hassall said.

Resistance, Currency

While there is resistance in the early $80 area curbing gains, investors haven't changed their view on the dollar, and that will underpin the direction for crude oil trading, he said.

The U.S. Dollar Index, a measure of the greenback against its six major counterparts, dropped 0.5 percent today, to 75.3 after posting its first weekly advance this month. The dollar fell for the first time in three days to $1.4935 against the euro from $1.4862 in New York on Nov. 20.

"We are seeing the oil price higher today and a lot of that has to do with the fact the U.S. dollar is a bit softer," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "You get investment inflows into commodities as hedge against dollar weakness."

Brent crude oil for January settlement rose as much as $1.08, or 1.4 percent, to $78.28 a barrel on London's ICE Futures Europe exchange. It was at 78.26 a barrel at 3:27 p.m. Singapore time. It fell 0.6 percent to $77.20 on Nov. 20.

Iran Missiles

Iran, the world's fourth-largest oil producer, is testing an air defense system this week in its largest military exercise to assess the country's ability to protect its nuclear plants.

The new anti-aircraft defense system will be tested in an operation called "Aseman-e-Valayat 2," state-run Press TV cited Defense Minister Ahmad Vahidi as saying in Tehran late yesterday after the drills began.

Iran is under three sets of United Nations Security Council sanctions, the first imposed in December 2006, for its refusal to halt uranium enrichment for its nuclear program.

"From oil's behavior, I don't think the situation in Iran has an impact. If it does, it will be small," Clarence Chu, an options trader at Hudson Capital Energy in Singapore said.

Net Longs, Valero

Hedge-fund managers and other large speculators decreased their bets on rising oil prices for a third week, according to U.S. Commodity Futures Trading Commission data.

Speculative net-long positions, the difference between orders to buy and sell the commodity, fell 1.9 percent to 86,348 contracts in the week ended Nov. 17, the Washington-based commission reported last week.

Valero Energy Corp., the largest U.S. refiner, said it will permanently close its Delaware City, Delaware, plant because of mounting losses after the recession eroded demand for gasoline and diesel.

The shutdown will affect 550 employees and will result in a fourth-quarter charge of $1.7 billion to $1.8 billion, Valero said Nov. 20 in a statement. Company spokesman Bill Day said the plant has lost $1 million a day this year.

The Delaware plant is the third and largest U.S. refinery to be shuttered this year because of evaporating profit margins.

"At the moment we think fundamentally inventories are relatively high, supply is adequate to keep up with demand," said Commonwealth Bank's Moore. "Oil prices may have some potential for a pullback in the next few months."