* Moody's Greece downgrade pulls oil, equities off highs
* Euro zone industrial output April rise lifts oil
* Coming up: July Brent contract expiry on Tuesday (Recasts, updates prices, market activity to settlement)
By Robert Gibbons
NEW YORK, June 14 (Reuters) - U.S. oil prices rose on Monday as uplifting economic news from Europe fed optimism about the global economy and outweighed a downgrade of Greece's debt.
U.S. crude for July <CLc1> rose $1.34, or 1.82 percent, to settle at $75.12 a barrel after an early $75.99 intraday peak.
London's ICE Brent <LCOc1> for July delivery rose 85 cents to settle at $75.20 a barrel. The Brent July contract expires on Tuesday.
"Crude futures are up on optimistic economic data from Europe and on perception that as long as the drilling moratorium is in effect in the Gulf of Mexico, prices will continue to rise," said Phil Flynn, analyst at PFGBest Research in Chicago.
Oil and equities received an early lift from data showing euro zone industrial production in April surged year-on-year more than in any month in almost two decades, giving investors renewed confidence about the global economy. [
]Crude eased off early gains after Moody's Investors Service downgraded Greece government bond ratings into junk territory, citing risks in the euro zone/IMF rescue package for the debt-laden country. [
]"Crude failed near $76.00 and spent much of the morning trading sideways. But it began to drift lower, accelerated by the Moody's downgrade of Greece. All markets backed off earlier highs," said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.
The euro strengthened against the dollar, but the euro also pared gains when the Greece debt downgrade rekindled fears about excessive debt levels in the region. [
] The dollar index <.DXY> remained weaker against a basket of currencies.A weaker U.S. dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the currency oil producers receive for their product.
The European industrial data had rallied global stocks and U.S. stocks were higher when oil settled, but gains were limited by the news of the Greece downgrade. [
] [ ]European leaders meet Thursday in an effort to convince financial markets that the debt crisis can be contained through improved policy coordination and budget discipline. [
]Though oil prices slipped on Friday, they managed to post a gain for the week, with U.S. crude prices up more than 3 percent on lift from strong Chinese export data and lower crude stockpiles [
] reported by the government.The U.S. National Hurricane Center said that a low-pressure system in the central Atlantic Ocean had a 40 percent chance of developing into a tropical cyclone over the next day or two. [
] Earlier on Monday, the NHC had said there was a 60 percent chance a storm would develop.OPTIMISM ABOUT DEMAND
Oil traders and analysts have been eyeing indications of better U.S. demand as the summer driving season heats up and distillate use improves.
After reaching a 19-month high above $87 a barrel in early May, crude futures fell below $65 a barrel later in the month as the European debt crisis unfolded.
Money managers raised their net long positions for crude oil in the week to June 8, the U.S. Commodity Futures Trading Commission said Friday, marking the first time the net long positions increased since the start of the euro zone crisis. [
] (Graphic: http://graphics.thomsonreuters.com/10/CFTC_Crude110610.gif )For prices to extend their upward march, U.S. crude need to settle above $76, a level reached in intraday trade last week for the first time in a month, according to Tony Nunan, a risk manager with Mitsubishi Corp, based on technical chart analysis.
Oil analysts also are anticipating U.S. crude oil output will be pared by offshore drilling delays in reaction to BP's Gulf of Mexico oil spill. [
]"With the U.S. drilling ban likely to hit supplies from the third quarter onward and demand expected to rise seasonally between now and August, we feel that seasonality and fundamentals are moving towards a price rebound," J.P. Morgan analyst Lawrence Eagles said in a report.
A Reuters analyst survey on Monday yielded a forecast for crude supplies to have fallen last week. Products stocks were expected to be up slightly. [
] (Additional reporting by David Sheppard in London, Alejandro Barbajosa in Singapore and Gene Ramos in New York)