Oil prices soar on new-home sales

By Chavon Sutton, staff reporter

NEW YORK (CNNMoney.com) -- Oil prices jumped Friday after upbeat home sales data helped to ease concerns about increased supply and weak demand.

What prices are doing: Crude oil for June delivery jumped $1.42 cents, or 1.7%, to settle at $85.12 a barrel.

For more commodities prices, click chart.

Oil prices are up marginally for the week, but are 80% higher than they were at this time last year.

What's moving the markets: Prices started the trading day lower, but turned positive after the government reported record growth in new-home sales.

The Census Bureau announced Friday that sales of new homes rose in March at the fastest single-month rate in 47 years. This ended a 4-month stretch of declines in the housing data.

Prices were also buoyed by the announcement from Greece Prime Minister Geórgios Andréas Papandréou that his nation would activate a joint European Union-International Monetary Fund bailout package.

The request sent the dollar down 0.7% against the euro to $1.3391, the first decline in several trading sessions. A weaker dollar makes crude, which is denominated in the U.S. currency, cheaper for foreign investors and tends to bolster demand and prices.

What analysts are saying: "Greece and housing really seem to be driving this," said Phil Flynn, senior market analyst for PFG Best. "The housing data, in particular, gives credence to the optimism we've seen."

Before Friday's upturn, crude prices had struggled, as traders looked for direction amid mixed signals.

On the positive side, there were a slew of upbeat earnings this week and the government reported lower weekly jobless claims. This would indicate higher potential demand and typically support higher prices.

But, higher crude oil stocks, the ash cloud from the Iceland volcano, and fraud charges leveled against Goldman Sachs (GS, Fortune 500) overshadowed the positive news.

Although prices ended the week higher, MF Global's Tom Pawlicki says the near-term direction of the energy markets remains to be seen, given the "degree of volatility and two-sidedness" that plagues the markets.

And the Greece story is likely to persist, adding uncertainty to that market that could keep a lid on prices. "The jury remains out as to whether or not [aid to Greece] will even be enough to stop the country from defaulting and exiting the euro," said Pawlicki.

Bearish traders, who fear that Greece's problems could spill over to other European nations and affect the global economic recovery and energy demand, could sell off more.

Looking ahead: Traders will be keeping an eye on next week's jobless claims and oil inventory reports for further hints of economic strength. To top of page

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