Oil rose on Tuesday as U.S. pending home sales data added to optimism the economy may be turning around, boosting expectations of a rebound in fuel demand.
Pending sales of previously owned homes in the world's top oil consumer shot up by 6.7 percent in April, the biggest monthly gain in 7-1/2 years, sending U.S. equities markets higher.
U.S. crude rose 9 cents to $68.67 a barrel by 1:53 p.m. EDT (1753 GMT) after optimism about an economic recovery sent prices to the highest level since early November on Monday.
London Brent crude traded up 23 cents at $68.20.
The rise extended a 30 percent gain in oil prices in May as expectations the worst of the global economic crisis may be over bolstered equities and commodities markets. <.N>
Crude continues to remain firm in anticipation that green shoots will soon start becoming branches, but I think we need to be cautious in here, said Nauman Barakat, senior vice president at Macquarie Futures USA.
Further support came as the dollar fell to its lowest level this year against the euro and a basket of currencies, reversing earlier gains, on rising risk tolerance fueled by views the global economy is on the road to recovery.
OPEC Secretary General Abdullah al-Badri said oil prices could reach $90 a barrel early next year, adding the producer group would not increase supply until global inventories had been drained.
The price will go to $80 to $90 maybe at the beginning of 2010, al-Badri told the Reuters Global Energy Summit.
(For other news from the Reuters Global Energy Summit, click on http://www.reuters.com/summit/GlobalEnergy09?PID=500)
Last week, OPEC decided to keep production targets unchanged after agreeing a series of deep cuts in 2008 to stem a steep slide in crude oil prices from record highs near $150 a barrel struck last July.
Traders were also awaiting crude and product inventory data to be released by the American Petroleum Institute later Tuesday and the U.S. Energy Information Administration on Friday, which will reflect the Memorial Day holiday weekend that traditionally kicks off the summer driving season.
A revised Reuters survey of analysts forecast weekly U.S. inventory data would show a 1.4-million-barrel decline in crude stocks in the world's top oil consumer for the week to May 29, while gasoline and distillate inventories were seen rising.
Cooler sea temperatures and a possible El Nino prompted the Colorado State University forecast team to reduce its Atlantic storm season prediction on Tuesday to 11 tropical storms, including five hurricanes.
The 2009 Atlantic hurricane season officially started on Monday and runs through November 30, and many analysts said the potential supply impact for this year would likely be softer because U.S. stockpiles were brimming.
(Reporting by Matthew Robinson, Gene Ramos and Robert Gibbons in New York, Ikuko Kao in London and Chu Baizhen in Singapore; Editing by Christian Wiessner)