Oil above $78 after economic reports
NEW YORK -- Oil prices rose on Monday, backed by the weaker dollar and strong economic data in the U.S. and China, which raised hopes for an increase in energy demand.
By midday, benchmark crude for December delivery added $1.28 to $78.28 a barrel on the New York Mercantile Exchange on encouraging U.S. economic numbers on manufacturing, construction and home sales.
The contract fell $2.87 to settle at $77.00 on Friday as the dollar gained and stock markets dropped on news U.S. consumer spending and confidence had fallen in September.
The Institute for Supply Management, a trade group of purchasing executives, said Monday that U.S. manufacturing activity grew in October at the fastest pace in more than three years, helped by government spending and higher demand from overseas.
The strong report raised hopes that energy demand, which has been hampered by the recession, may be rebounding. Yet the dollar keeps falling, which has helped push oil prices higher as well.
Dollar-based oil can look like a bargain for investors holding stronger currencies.
Also Monday, the Commerce Department reported that September construction spending posted a better-than-expected performance, powered by the largest jump in housing construction in more than six years.
And the National Association of Realtors said that the volume of signed contracts to buy previously occupied homes rose for the eighth straight month in September as buyers scrambled to take advantage of a tax credit for first-time owners that expires at the end of this month.
Oil also received a boost from a weakened dollar and strong economic data out of China, which could be a stimulus for greater oil demand.
Danske Bank said the data suggested that "the Chinese recovery remains strong and might even be gaining further strength following a slowdown during (the third quarter)."
Oil has slumped from its 2009 high of $82 a barrel last month as the dollar reversed some of its earlier losses, but on Monday the euro gained again on the U.S currency, rising to $1.4780 from $1.4730 on Friday.
Investors will be paying attention to more third quarter U.S. corporate earnings results this week.
On Monday, Ford Motor Co., surprised the market by reporting net income of $1 billion in the third quarter and forecast a "solidly profitable" 2011. Ford lost more than $14.6 billion in 2008 and hasn't posted a full-year profit since 2005.
Cisco Systems Inc., Kraft Foods Inc., Marathon Oil Corp., Starbucks Corp. and Time Warner Inc. are also scheduled to report earnings.
In other Nymex trading, heating oil gained 3.8 cents to $2.0429 a gallon. Gasoline for December delivery gained 3.4 cents to $1.994 a gallon. Natural gas for December delivery fell 15.5 cents to $4.89 per 1,000 cubic feet.
In London, Brent crude for December delivery gained $1.50 to $76.70 on the ICE Futures exchange.