LONDON, Jul 20 – Oil prices rose sharply on Monday, lifted by rising global equities and positive data that suggested the worst may be over for the crisis-hit US housing market, analysts said.
New York\’s main futures contract, light sweet crude for delivery in August, gained 1.25 dollars to 64.81 dollars a barrel.
Brent North Sea crude for September delivery climbed 1.21 dollars to 66.59 dollars.
"The relative strength of equities was a main input into the rebound of crude oil (last week) and will remain a key input for this week," said PetroMatrix analyst Olivier Jakob.
European shares rallied Monday after pre-weekend gains on Wall Street and earlier in Asia, boosted by reports of a rescue deal for US lender CIT, analysts said.
US media reported Monday that business lending giant CIT Group, which provides capital for small- and mid-sized businesses, has negotiated an agreement worth 3.0 billion dollars with its bondholders to avoid bankruptcy.
Oil soared last week as traders welcomed encouraging US data and earnings reports that could boost the recession-mired American economy — which is the world\’s top energy consumer.
"Crude prices regained ground last week, with (New York crude) closing at 63.60 per barrel on Friday — some 3.90 dollars per barrel higher than at the start of the week," said analysts at the JBC Energy consultancy in Vienna.
"Crude prices were also up in early trading today. Better than expected data on the US economy contributed to the positive sentiment on the stock market, with new home starts increasing in June," they added.
Data released Friday showed US construction starts on privately owned homes rose 3.6 percent in June to a seasonally adjusted rate of 582,000, the fastest pace since November.
The number of housing starts was much higher than the 530,000 expected by most analysts and followed a revised 562,000 in May, up 30,000 from the initial estimate.
David Bensimon of financial advisory firm Polar Pacific said crude markets were currently "in the midst of a consolidation" and could rise in the near term.
"The market has begun a new multi-year advance … There is some potential, if oil holds at (current) levels, for it to move to 80 dollars in the next four to six weeks," he said.
Oil prices have slumped amid the economic downturn after striking all-time highs above 147 dollars a year ago but have slowly clawed back ground on hopes that the global economy is on the mend.