* U.S. stocks up on earnings, home sales data, support oil
* U.S. offshore oil output returning to normal after storm
* Coming up: API oil inventory data Tuesday 4:30 p.m. EDT
(Adds S&P 500 index rising to one-month high in paragraph 7.)
By Joshua Schneyer
NEW YORK, July 26 (Reuters) - Oil steadied near $79 a
barrel on Monday as stronger U.S. home sales stoked economic
optimism, while oil output was restored in the Gulf of Mexico
after Tropical Storm Bonnie passed uneventfully.
U.S. crude for September delivery <CLc1> settled unchanged
at $78.98 a barrel.
Oil prices briefly reached $79.60 a barrel on Friday, an
11-week high for front-month crude, as offshore producers
evacuated platforms and shut in output to brace for Tropical
Storm Bonnie.
As much as 826,000 barrels a day of output was shut in by
Saturday when Bonnie fizzled and left the region's energy
infrastructure unharmed, according to government estimates. By
Monday, companies restored about half of the idled output and
operations were returning to normal. []
Government data showed U.S. sales of new homes rebounded
strongly in June from May's record low, driving the number of
houses on the market to the lowest level in more than four
decades. []
The positive economic data helped lift oil and equities,
which also rose after stronger earnings forecasts from package
shipper FedEx Corp <FDX.N> [].
The Standard & Poor's 500 Index <.SPX> rose nearly 1.1
percent in late trading, to a new one-month high.
ICE Brent crude <LCOc1> settled up 5 cents at $77.50.
The dollar weakened against the euro, encouraging buying of
dollar-priced commodities like oil, after last week's European
bank stress tests revealed vulnerabilities at just seven out of
91 banks across the region. [] <.DXY>
"The storm didn't do any real damage so that provides some
pressure, but the market is optimistic about the homes sales
data, the stock market and that the banks' stress test is
over," said Phil Flynn, analyst at PFGBest Research in
Chicago.
GEOPOLITICAL CONCERNS
The dispute over Iran's nuclear program also simmered. The
European Union imposed tighter sanctions on Iran, approving
measures to block oil and gas investment and curtail Tehran's
refining and natural gas capability. []
Iran, the world' fifth-largest crude exporter, is ready to
return to talks on a nuclear fuel swap without conditions, its
envoy to the International Atomic Energy Agency was quoted as
saying by the official IRNA news agency. []
Venezuelan President Hugo Chavez on Sunday threatened to
cut off oil supplies to the United States, the largest crude
buyer, should Colombia order any attack on Venezuela.
Venezuela has never carried out past threats by Chavez to
cut supplies to the United States.
Tensions have risen between the South American countries
after Colombia's outgoing President Alvaro Uribe accused
Venezuela of harboring Colombian rebel fighters.
[]
Oil traders await the latest figures on U.S. oil
inventories due on Tuesday and Wednesday. Last week's reports
showed unexpectedly large stock rises.
According to a Reuters analyst poll on Monday, this week's
data is likely to show that crude inventories fell by 1.8
million barrels last week, although product stocks were
predicted to have risen. []
U.S. crude oil prices should average $79.44 in 2010,
according to a Reuters poll of 31 analysts, banks and
government agencies on Monday. The figure was down from
estimates of an average $79.86 a barrel in a June survey.
[]
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For a technical view of oil prices, see: []
For Reuters poll on prices click []
Table <POLL70>
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(Additional reporting by Robert Gibbons in New York, David
Turner in London and Fayen Wong in Perth; Editing by David
Gregorio and Sofina Mirza-Reid)
