* Oil hits highest since July 2
* European stocks hit 8 1/2 month high
* Goldman targets $85 for U.S. crude at year-end
(Updates prices, adds Goldman Sachs price view)
By Alex Lawler
LONDON, July 27 (Reuters) - Oil rose for a third session on
Monday to hit the highest in more than three weeks near $69 a
barrel as stock markets gained on hopes of an economic recovery
that would boost fuel demand.
European equities climbed to the highest in more than eight
months as a better-than-expected earnings season improved
sentiment, following on from gains in Asia. [] Wall
Street was expected to open higher.
U.S. crude <CLc1>, which has risen in eight of the last nine
trading days, climbed 58 cents to $68.63 by 1105 GMT. Prices hit
an intraday high of $68.99, the highest since July 2. Brent
crude <LCOc1> rose 61 cents to $70.93.
"As we are still in the earnings season and have to
face some key inputs on the U.S. economy this week, the oil
markets are still likely to be lead by equities," said Olivier
Jakob, oil analyst at Petromatrix.
Oil and other commodities have tracked equities markets in
recent months as analysts seek signs of the economic outlook
after the downturn cut world energy demand for the first time in
a quarter century.
This week's earnings include Exxon Mobil <XOM>, Honda Motor
<7267.T>, Motorola <MOT>, Deutsche Bank <DBKGn.DE> and BP
<BP.L>. Data this week includes June U.S. new homes sales later
on Monday and U.S. second-quarter gross domestic product figures
on Friday.
A faster rebound in Asian economies, led by China, would
offer further support for oil prices in coming months, some
analysts said.
"The central factor in determining the speed of adjustment
in oil products will be the pace of recovery in Asia," Barclays
Capital said in a note.
"The sensitivity of oil demand to economic growth is greater
in Asia than in other regions, and the tendency for economic
growth to surprise consensus estimates on the upside also
appears to be greater in Asia."
Goldman Sachs in a note on Monday maintained its year-end
price target for U.S. crude of $85 a barrel, saying "improving
oil fundamentals" later this year should provide support for the
market.
World oil consumption will rise for the first time in two
years in 2010 as a recovery in the global economy boosts demand,
according to a Reuters poll of top oil-tracking analysts and
organisations [].
Oil has more than doubled since falling to $32.40, the
lowest in more than four years, in December, due in part to
supply curbs by the Organization of the Petroleum Exporting
Countries.
Despite the rally, speculators have pared back bullish bets
in the crude market, cutting net long positions to a scant 2,218
lots in the week to July 21, regulatory data showed.
[]
(Additional reporting by Fayen Wong in Perth; Editing by Sue
Thomas)
