* Oil soars after breaking $80 technical level
* Equities surge on banking results
* Global manufacturing data shows some positive signs
* Coming Up: API U.S. oil inventory data Tuesday
(Recasts, updates prices)
By Edward McAllister
NEW YORK, Aug. 2 (Reuters) - Oil rose 3 percent on Monday
to break above $80 a barrel, its highest level in nearly three
months, as equity markets rose on positive economic sentiment
and the dollar weakened.
U.S. September crude <CLc1> settled up $2.39 at $81.34 a
barrel, the highest price since May 5. Crude looks to have
broken out of the $70-$80 a barrel range it traded in for most
of the last three months, triggering further buying.
In London, ICE Brent crude <LCOc1> rose $2.68 to $80.86 by
2:24 p.m. EDT (1824 GMT).
U.S. stocks hit 10-week highs, following on from European
stock markets which hit three-month highs on strong results
from leading banks. [] []
The U.S. dollar fell to a three-month low against a basket
of currencies <.DXY> as investors moved to riskier assets,
which supported oil prices. A weaker greenback makes
commodities cheaper for holders of other currencies.
"With the still-weak dollar, people are more attracted to
rising equity prices. That is the reason for the technical
breakthrough today," said Gene McGillian, analyst at Tradition
Energy in Stamford, Connecticut.
Global manufacturing showed little risk of a double-dip
recession as output in July grew in the United States and
Europe and a rare contraction in China suggested Beijing was
successfully reining in its hot economy. []
The U.S. manufacturing sector grew last month for a 12th
straight month and at a rate slightly better than expected. For
details, see []
STORM RISK
Tropical Depression 4 formed in the Central Atlantic Ocean,
the U.S. National Hurricane Center said, which also supported
oil prices. []
The hurricane season is entering what in recent years has
been a period of peak activity between August and early
October. Atlantic storms sometimes enter the Gulf of Mexico,
posing a threat to U.S. and Mexican oil infrastructure.
Some analysts warned oil's rally may be short-lived if
investors focus on the weak fundamental outlook following
lackluster economic data.
"I don't see a reason for any more significant rise in oil
prices," said Christophe Barret, oil analyst at Credit
Agricole.
"Fundamentals have not improved when you look at Chinese
and U.S. economic indicators they look pretty weak," Barret
added.
However, the growing optimism among speculative investors
on the outlook for longer-term oil prices was evident in data
from the Commodity Futures Trading Commission (CFTC) on Friday.
Money managers increased net long crude oil positions to the
highest level since May on the New York Mercantile Exchange in
the week to July 27, the CFTC said. (Graphic:
http://link.reuters.com/fyh82n )
(Additional reporting by Joe Brock in London, Robert Gibbons
and Selam Gebrekidan in New York, and Alejandro Barbajosa in
Singapore; Editing by Marguerita Choy)
