* European equities at four-week high
* Euro zone industrial output jumped in April-Eurostat
* Tropical storm could form in the Atlantic - NHC
* For a technical view, click: []
(Updates prices, adds tropical storm)
By David Sheppard
LONDON, June 14 (Reuters) - Oil prices rallied by 2 percent
to above $75 a barrel on Monday as renewed optimism about global
economic recovery boosted the fuel demand outlook and sent stock
markets higher across the globe.
U.S. crude for July <CLc1> rose to a high of $75.99 a barrel
and was up $1.92 at $75.70 a barrel at 1426 GMT, still down 13
percent from a 19-month high above $87 in early May.
ICE Brent <LCOc1> gained $1.66 to $76.01 a barrel.
Euro zone industrial output in April surged year-on-year
more than in any month in almost two decades, data showed on
Monday, reassuring investors the recovery could be gathering
pace.
"Some of the fears about the European debt crisis are
easing," said Tony Nunan, a risk manager with Mitsubishi Corp.
"If the dollar is falling, it means that people are more
relaxed to take on risk. People have believed for a long time
that the second half (of the year) will be better than the first
half," Nunan said.
The European Union's statistics office, Eurostat, said
industrial production in the 16 countries using the euro rose
0.8 percent month-on-month for a 9.5 percent year-on-year gain.
The euro <EUR=> rose to a one-week high against the dollar,
which was down by about 1 percent against a basket of currencies
<.DXY>. A weaker U.S. currency tends to boost the price of
dollar-priced commodities as they become cheaper for other
currency holders.
Asian and European stock markets rose to four-week highs,
while U.S. stocks built on last week's gains.
European leaders will meet on Thursday to set out proposals
to convince financial markets they can contain a debt crisis by
agreeing to tighten economic policy coordination and strengthen
budget discipline. []
Oil prices last week posted just their second weekly gain
since early May, with U.S. crude prices rising by more than 3
percent as strong Chinese export data signalled global growth
remains robust.
French bank Societe Generale <SOGN.PA> slightly lowered its
average U.S. crude oil <CLc1> forecasts for the third and fouth
quarters of this year on Friday to $80 and $85 respectively but
said it still expected prices to rise from here.
"The market has, in our view, turned excessively gloomy
about the global economy and about the demand outlook for
commodities in general," Societe Generale analyst Michael
Wittner said.
Prices were also supported after the U.S. National Hurricane
Center said a low-pressure system in the central Atlantic Ocean
had a 60 percent chance of developing into a tropical cyclone
over the next day or two, possibly threatening working oil rigs
in the Gulf of Mexico. []
OPTIMISM CARRIES ON
Oil consumption in the U.S. is recovering, helped by the
seasonal summer peak in gasoline use. The nation's crude
inventories fell more than expected in the last week of June,
trimming a surplus that has prevailed for almost two years.
Crude had fallen to below $65 a barrel in mid-May as the
European debt crisis unfolded.
Money managers last week raised the number of bets crude
prices would rise, the U.S. Commodity Futures Trading Commission
(CFTC) said on Friday, marking the first time long positions
have increased since the start of the euro zone crisis.
[]
For prices to extend their upward march, U.S. crude would
have to settle above $76, a level reached in intraday trade last
week for the first time in a month, Nunan said, based on
technical chart analysis.
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For a graphic managed money positions in crude oil futures
click:
http://graphics.thomsonreuters.com/10/CFTC_Crude110610.gif
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While demand is rising, U.S. supplies could be tightened by
BP's Gulf of Mexico oil spill by the end of the summer,
according to JP Morgan, following U.S. President Barack Obama's
decision to delay new offshore drilling. []
"With the U.S. drilling ban likely to hit supplies from the
third quarter onwards and demand expected to rise seasonally
between now and August, we feel that seasonality and
fundamentals are moving towards a price rebound," JP Morgan
analyst Lawrence Eagles said in a report.
"Overall, while risks remain, we believe that the oil market
will start to tighten up over the coming months."
(Additional reporting by Alejandro Barbajosa in Singapore;
Editing by William Hardy, editing by Jane Baird)
