In London, Brent crude was flat on Thursday, pressured by a fragile economic recovery in Europe, which is lagging the United States and Asia. "I am still bullish about the oil price in the short-to-medium term with demand likely to be strong due to recent reports of strong US employment and retail sales data. Supply issues from Iran are also still lingering," Miguel Audencial, a trader with CMC Markets in Sydney, said. US April crude rose 31 cents to $105.75 a barrel by 0312 GMT, while in London ICE Brent crude for April delivery edged up 3 cents to $125 a barrel. The US Federal Reserve on Tuesday acknowledged the improved economic outlook by slightly upgrading its forecast, expecting "moderate" growth over coming quarters and a gradual decline in the unemployment rate. Supply worries sparked by tensions with Iran continued to persist and on Wednesday US President Barack Obama, in a joint news conference with British Prime Minister David Cameron, said the window for a diplomatic solution with Iran over Tehran's nuclear programme was shrinking. A majority of Americans would support US military action against Iran if there were evidence that Tehran is building nuclear weapons, even if such action led to higher gasoline prices, a Reuters/Ipsos poll showed on Tuesday. The West suspects Iran of using its nuclear programme to build atomic weapons, which Tehran denies. The United States and the European Union have imposed sanctions against Iran for its disputed nuclear activities, and mounting tensions between the Islamic Republic and the West have elevated crude oil prices. After dallying for days, Iran on Wednesday said it welcomed the resumption of stalled nuclear talks with six world powers, saying the two sides should set "the date and the venue", Iranian media reported. HIGH INVENTORIES, STRONG DOLLAR Growing crude inventories in the United States, the world's largest oil consumer, and a stronger dollar kept a ceiling on oil prices. On Wednesday, US government data showed crude stocks at the Cushing, Oklahoma, delivery hub surged 2.5 million barrels to a nine-month high, government data showed. Inventories there have risen for eight straight weeks, amassing the biggest eight-week gain since January 2009. The US president and British prime minister also discussed the possibility of releasing emergency oil reserves during their meeting, the first sign that Obama is starting to test global support for an effort to knock back near-record fuel prices. The dollar hit a fresh 11-month high against the yen and a one-month peak against the euro in Asia on Thursday, supported by growing optimism on the US economic recovery and subsequent rises in US bond yields. The US unit gained against all other currencies, with its index against a basket of major currencies hitting its highest in two months at 80.738. It last stood at 80.62. Gains in the dollar can pressure dollar-denominated commodities by making them more expensive to consumers using other currencies.