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Oil pushes toward $80 as global stocks gain

Oil prices rose above $79 a barrel on Monday as a global stock market rally gave crude traders optimism.

By early afternoon in Europe, benchmark crude for September delivery was up 83 cents to $79.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 59 cents to settle at $78.95 on Friday.

Asian and European stock markets rallied Monday, led by a 1.8 percent increase in Hong Kong's Hang Seng index and a 2 percent rise in London's FTSE 100 index. Oil traders often look to equity markets as a reflection of overall investor sentiment.

Oil has traded briefly above $80 this year before quickly sliding back into the $70s amid signs the U.S. economic recovery may slow in the second half. The government said Friday that second-quarter gross domestic product rose 2.4 percent but demand — such as consumption, business investment and housing construction — gained 5.1 percent, a good sign for oil demand.

"Anyone worried about a slowdown in U.S. demand should have been tickled pink by the Q2 GDP figures," DBS bank said in a report. "High unemployment does not mean demand growth cannot be strong."

Investors will be closely watching July employment figures. Analysts are expecting the economy lost 60,000 jobs last month and the unemployment rate rose to 9.6 percent from 9.5 percent in June.

Analysts also said that speculators buying into oil to take advantage of the weaker dollar seemed to be behind oil's rise despite the continued weakness in demand.

"Their buying seems to keep prices moving higher despite every logical reason in the world working against prices moving higher," said a report from U.S. energy consultancy Cameron Hanover.

The euro bought $1.3067 on Monday, up from $1.3053 late Friday in New York, while the British pound rose to $1.5803 from $1.5699.

A weaker dollar makes crude cheaper for investors holding other currencies.

In other Nymex trading in September contracts, heating oil rose 2.78 cents to $2.1159 a gallon, gasoline gained 2.21 cents to $2.1445 a gallon and natural gas rose 1.7 cents to 4.940 per 1,000 cubic feet.

In London, Brent crude was up 96 cents to $79.14 a barrel on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.

Barb Kampbell of The Trucker staff can be reached for comment at [email protected] .

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