Oil hit $75 for the first time in 10 months on Tuesday, recouping earlier losses in line with equity markets on data that showed U.S. house prices climbed and consumer confidence rose to the strongest since May.
U.S. crude jumped to $75.00 a barrel and it was trading 33 cents up at $74.70 a barrel by 1405 GMT (10:05 a.m. EDT), having fallen to as low as $73.41 earlier.
On Monday, it hit $74.81, the highest intraday price since mid-October.
Brent crude was down 31 cents at $73.95, trimming its earlier fall by nearly $1.
We continue to see the market track global markets to look for some more green shoots, said Andrey Kryuchenkov, an analyst at VTB Capital in London.
European shares and Wall Street extended gains as U.S. consumer confidence climbed to the strongest level since May on an improved outlook on the job market.
Earlier, share prices picked up as U.S. President Barack Obama renominated Ben Bernanke as chairman of the U.S. Federal Reserve and data showed home prices rose in June for a second straight month. <.N>
Commodities markets have closely tracked equities indexes in recent months. Dealers view stocks as an indicator of economic performance, which would boost or reduce energy and commodities demand.
A Reuters survey of more than 30 analysts showed oil prices would average above $73 next year.
The analysts raised their consensus forecast for the fifth straight month, on expectations the strength of economic improvement and higher fuel demand would spur a sustained oil price rally.
The oil market's focus will shift later to weekly U.S. oil inventory data.
Analysts in a Reuters survey forecast a 900,000 barrel drop in U.S. crude inventories. Gasoline inventories were forecast to fall, while middle distillate stocks, including heating oil, were seen increasing.
Last week, U.S. crude stocks posted a big fall, as refiners boosted operations and imports dropped sharply to hit their lowest level in 11 months, U.S. Energy Information Administration data showed.
Data from the American Petroleum Institute will be released at 2030 GMT (4:30 p.m. EDT) on Tuesday, and the equivalent U.S. government data is due out on Wednesday.
(Additional reporting by Ramthan Hussain in Singapore; editing by Sue Thomas)