Crude-oil futures hit their highest settlement price since May amid market optimism that struggling euro-zone nations will receive regional assistance to strengthen their economies.
Light, sweet crude for September delivery rose 71 cents, or 0.7%, to settle at $96.68 a barrel on the New York Mercantile Exchange. The September contract expired at the close of the session. The most actively traded October-delivery contract rose 58 cents, or 0.6%, to settle at $96.84 a barrel. Brent crude on ICE Futures Europe rose 94 cents, or 0.8%, to settle at $114.64 a barrel.
"The market is obviously on a bull run here," said Andy Lebow, a broker for Jefferies Bache. "It thinks that the situation in Europe is going to improve."
The euro hit its highest level since early July--recently trading at $1.24696 against the U.S. dollar--on hopes that euro-zone leaders would announce new measures to assist regional economies. Greek Prime Minister Antonis Samaras has meetings with euro-zone officials and heads of state later this week.
A weaker dollar makes dollar-denominated commodities more affordable for traders using foreign currencies.
Oil futures rallied in tandem with the commodity sector as a whole, but demand for crude oil is insufficient to support the price rise, Mr. Lebow said.
Still, macroeconomic factors are driving oil more strongly than market fundamentals, said Phil Flynn, an analyst at Price Futures Group in Chicago.
"As long as the market believes that they're going to get a bailout and they're going to get a deal to get things done, it's going to be very bullish in the short term," Mr. Flynn said.
Investors are awaiting the Energy Information Administration's weekly U.S. inventory survey, which will be released at 10:30 a.m. EDT Wednesday.
Analysts are expecting a 200,000-barrel rise in crude oil inventories in the week ended Friday, according to a Dow Jones Newswires survey. Analysts also expect a 400,000-barrel drop in gasoline inventories, a 700,000-barrel increase in distillate stocks and a decline in refinery utilization by 0.2 percentage point.
Market participants are also eyeing the Wednesday release of the most recent meeting minutes from the Federal Reserve's policy-making arm.
Front-month September reformulated gasoline blendstock, or RBOB, rose 3.44 cents, or 1.1%, to $3.0652 a gallon. September heating oil rose 3.12 cents, or 1%, to $3.1243 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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