Crude Rises More Than $1 as Risk Aversion Recedes

Reuters

Oil rose more than $1 a barrel Monday, supported by hopes European leaders will come up with solutions to the region's debt crisis and broader gains in global markets.

Concerns about the euro zone crisis, which along with a raft of poor economic U.S. data, have dragged down oil prices this month. But hopes of a resolution rose ahead of a Tuesday meeting between French and German politicians.

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The optimism spread throughout markets, with U.S. stocks up more than 1 percent, helping offset weak U.S. manufacturing and home builder sentiment data. The dollar weakened as investors so sought out riskier assets.

``It does look as if not only our (U.S.) debt problem but also the European problem and some of the fears that drove (U.S. oil) to $75 a barrel have receded,'' said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.

``Whether or not this is a temporary reprieve remains to be seen.''

Brent crude oil futures for September rose $1.25 to $109.28 by 10:59 a.m. EDT, after dipping earlier to $107.40. U.S. crude traded up $1.73 to $87.11 a barrel.

Both crude oil benchmarks recorded their third straight weekly loss in volatile trading last week.

A downgrade of U.S. credit worthiness by ratings agency Standard & Poor's and fears that France might suffer the same fate sparked selling this month.