Oil rose over $2 a barrel on Tuesday as equity markets continued to move higher after U.S. housing starts rebounded unexpectedly in February.
U.S. light crude for April delivery rose $2.02 to $49.37 a barrel by 2:14 p.m. EDT. April crude oil options expire at the end of the day's trading.
London Brent crude rose $1.93 to $48.39.
Options on futures are one way to bet on oil prices without the obligation to make or take delivery of the physical product. They also limit risks for buyers.
There are two things working on the market today, primarily. There is options expirations where there's a lot of open interest in the $50 call. We've also got stronger equities markets, they're moving up very nicely here, said Addison Armstrong, director of market research at Tradition Energy, Stamford, Connecticut
Wall Street was boosted by the 22.2 percent jump in housing starts in February, the first gain since April, and an upbeat broker comment on bellwether Cisco Systems which drove technology shares up sharply.
However, analysts are cautious that this marks a definite turnaround for the world economy.
On Monday, data showed U.S. credit card defaults rose in February to their highest level in at least 20 years, undermining hopes of bank stability.
Data on Monday also showed industrial output in the United States in February plummeted to its lowest level in almost seven years.
Oil has tumbled $100 from a record high above $147 last July as the global economic meltdown has dented demand for oil worldwide.
The Organization of the Petroleum Exporting Countries met on Sunday and decided not to cut output further but rather concentrate on cuts put in place in September that total 4.2 million barrels per day.
OPEC has really restored some of its credibility and there is optimism that it will be able to reach the target, said Clarence Chu, a trader at U.S.-based Hudson Capital Energy in Singapore
The producer group said Monday that is was waiting for the Group of 20 (G20) summit on April 2, and its moves to shore up the world economy, before cutting production further.
An updated Reuters poll of ahead of U.S. weekly inventory reports Tuesday and Wednesday from the API and the EIA, showed an expected 1 million barrel rise in crude stocks, a 0.7 million barrel rise in distillate stocks and a 1.2 million barrel draw in gasoline stocks.
(Additional reporting by Robert Gibbons and Gene Ramos in New York, Joe Brock in London and Fayen Wong in Perth; Editing by Marguerita Choy)