* Euro hits 2-week high vs dollar, helps lift oil
* European debt auctions bolster investor confidence
* Coming up: API inventory data, 4:30 p.m. EDT (2030 GMT)
(Recasts, updates with settlement prices)
By Robert Gibbons
NEW YORK, June 15 (Reuters) - U.S. oil futures rose more
than 2 percent on Tuesday, settling at its highest in more than
five-weeks as the euro and equities markets rallied after debt
auctions in Europe bolstered investor confidence in global
economic recovery.
"Crude futures are up as euro-zone worries appear to be
receding and as traders are expecting inventory reports to show
a third straight week of a drawdown in U.S. crude inventories,"
said Gene McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
U.S. crude futures <CLc1> rose $1.82, or 2.42 percent, to
settle at $76.94 a barrel, highest since the $77.11 close on
May 6. It traded as high as $77.16 on Tuesday, highest intraday
since $77.68 was struck on May 11.
In London, expiring front-month July ICE Brent <LCOc1>
crude futures rose $1 to settle at $76.20, going off the board
at a deficit to it's U.S. crude counterpart.
Global stocks gained and the euro hit a two-week high
against the dollar after debt auctions in Spain, Belgium and
Ireland bolstered investors' confidence about the state of the
euro zone's finances. [] []
U.S. stocks also got a boost from strong technology shares
and the S&P 500 index rose above its 200-day moving average,
adding to the momentum. []
Technical strength also provided lift to oil, as U.S. crude
futures pushed above its 200-day average at $76.77. (Reuters Insider: http://link.reuters.com/nus22m)
Tuesday's strength should have the market, "aimed at about
$78.50," said Tradition's McGillian.
"The strength of the July crude futures has narrowed the
front-month discount against August to below $1, with signs
that fund index rolls are done," he added.
Ratings agency Moody's downgrade of Greece's bonds limited
crude oil's strong rise on Monday as markets struggled to shake
off lingering nervousness about investing in riskier assets.
U.S. crude futures recently have been trading between the
May 20 low of $64.24, the weakest front-month price since July
30, 2009, and the 2010 peak of $87.15 struck on May 3.
Analysts expect oil to remain closely correlated to
international financial markets.
"Today, there is only one global market. There is a very
high correlation between oil and equities," said Olivier Jakob
of Petromatrix. "To break away from that correlation is going
to take something very significant."
As the euro strengthened on Tuesday, the dollar index
<.DXY>, measuring the U.S. currency against a basket of
currencies, slipped. (Graphic:
http://graphics.thomsonreuters.com/gfx/JBO_20101506105359.jpg)
Europe's problems have raised the possibility that even
Asia's fuel demand growth could take a hit.
China's Banking Regulatory Commission said on Tuesday the
global economic recovery was likely to be "slow and tortuous"
and China faced risks from a multitude of factors, including
trade protectionism and bad real estate loans. [
U.S. retail gasoline demand rose 1.4 percent versus week
ago in the week to June 11. but fell 2.2 percent against the
2009 period, MasterCard said. [ID:nNLLFHE66E]
The Department of Energy on Monday said U.S. retail
gasoline prices fell last week to their lowest level since
February [], which may help demand as the summer
driving season progresses.
NEXT FOCUS: INVENTORIES
The market will take further direction from weekly
inventory reports, starting with industry data from the
American Petroleum Institute on Tuesday at 4:30 p.m. EDT (2030
GMT), followed by government data on Wednesday.
A Reuters poll of analysts on Tuesday estimated crude oil
inventories would have fallen by 1.2 million barrels in the
week to June 11. Stores of refined products were expected to
have increased slightly.[]
Stores of refined products were expected to have increased
slightly.
Other factors recently cited as supportive to oil prices
have been forecasts that the U.S. hurricane season will be
particularly active and delays in U.S. Gulf of Mexico drilling
after BP Plc's <BP.L> oil spill. []
(Additional reporting by Gene Ramos in New York, Alejandro
Barbajosa in Singapore and Barbara Lewis in London; Editing by
Marguerita Choy)
