Oil prices rally on German, US data

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Promising economic news from Europe and the United States gave a spark to oil markets Tuesday, with rumors about more tensions with Iran adding to the buying.

New York's main contract, WTI crude for delivery in January, rallied $3.34 to $97.22 a barrel.

Brent North Sea crude for February jumped $3.09 to $106.73 in London deals.

Oil rose rebounded together with the euro after Germany's Ifo economic institute said its business sentiment index had risen in December against expectations, reducing fears of imminent recession.

Spain pulled off another successful bond auction, and reports said Greece was near a crucial deal with private banks to write down a chunk of its foreign debt.

In addition, strong data on new home starts in the US added to the bullish sentiment.

"The geopolitical concerns are still bubbling away but the real instigator for the rally today was the economic data," said Matt Smith of Summit Energy.

"We had some good data out of Europe, and there was a decent bond auction out of Spain, that steadied the ship over there. And the data out the US was very strong, versus expectations."

"The softer US dollar supported the strong upside correction in the oil market," added Sucden Financial Research analyst Myrto Sokou.

The euro shot above $1.31 on Tuesday following the positive German economic data. A weaker US unit makes dollar-denominated crude cheaper for buyers using the single currency, pushing up demand and in turn prices.

© 2011 AFP

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