Oil rises on U.S. home sales data

A government report shows sales of single family homes jumped by 11% in June, a positive sign for the recovery.

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NEW YORK (Reuters) -- Oil prices rose Monday as strong U.S. home sales data raised optimism about a turnaround in the economy.

Sales of new single-family homes in the United States rose by 11% in June, above analyst expectations, while the inventory of homes for sale fell to an 11-year low, government data showed on Monday.

"I think what you did see is that, when you have good news coming out, the market wants to respond immediately," said Gene McGillian, analyst for Tradition Energy in Stamford, Conn.

U.S. stocks were mixed as strong gains in the financial and homebuilding sectors offset caution over disappointing corporate results.

U.S. crude rose 33 cents to settle at $68.38 a barrel after earlier hitting $68.99, the highest since July 2. The gains came as gasoline and heating oil futures rose for the 10th session in a row.

Expectations that a rebound in the global economy could lift flagging oil demand has helped push crude prices up from below $33 a barrel in December. The recession has crimped crude demand, knocking oil off record highs near $150 a barrel hit in July 2008.

A Reuters poll of analysts forecast world oil consumption would rise next year for the first time in two years on expectations of a rebound in the global economy.

China, the world's No. 2 oil consumer, may consider a modest cut of about 2% in retail fuel prices after benchmark crude prices fell more than 5% since Beijing's last price hike, analysts and industry sources said.

Demand from China and other emerging economies ignited the recent six-year record rally in oil and commodity prices.

A Reuters poll of analysts ahead of weekly inventory data forecast a 300,000 barrel drop in U.S. crude oil inventories in the week ended July 24, while gasoline stocks were seen falling by 600,000 barrels.

Distillates inventories were seen rising by 1 million barrels during the week, according to the poll, which was taken ahead of data from the American Petroleum Institute due out Tuesday and a report from the U.S. Energy Information Administration due out Wednesday. To top of page

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