Oil jumped more than $1 on Monday, lifted above $77 per barrel by equities markets after U.S. stocks opened higher on Wall Street.
The move, supported by early signs of improving oil demand, put oil on track to break three straight days of lower settlements on concerns about slowing economic recovery and gloomy consumer sentiment.
On the New York Mercantile Exchange, U.S. crude oil for August delivery rose $1.68 to a high of $77.69 before easing back to trade around $77.21, up $1.20, by 1350 GMT. The contract settled down 61 cents at $76.01 a barrel on Friday, closing the week almost unchanged.
London Brent crude gained $1.20 cents to $76.57.
The stronger open on Wall Street appears to have triggered some fund buying, said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
U.S. stocks opened higher on Monday, signaling the S&P 500 .SPX could bounce back from its worst one-day drop since June 29 on Friday, as earnings season kicks into high gear. .N
Despite the jump in prices as the American market opened, analysts said oil prices were moving in a range either side of $75 per barrel with ample support due to large drawdowns in U.S. crude oil inventories over the past three weeks.
Implied volatility for U.S. crude has fallen to about 30 percent over the last month as prices have stabilized around $75 per barrel, which is in the middle of the price range preferred by many oil producers and consumer governments.
Technical analysts who look at price charts see strong support for August U.S. crude futures from the 50-day morning average (MA), now at $74.31, and solid overhead resistance at the 200-day MA, $3 higher at $77.51.
The oil market is within a fairly well defined range, said Weinberg. We are getting support from equity markets and also a bit from the weakness of the dollar against the euro.
European stocks strengthened on Monday, while the U.S. dollar index .DXY was flat against a basket of currencies as investors wound back on riskier assets. The euro was up 0.2 percent against the dollar. .EU
China closed the Dalian Xingang oil port in northeast China, home to the country's largest oil reserve bases, after crude pipeline explosions spilled oil into the sea, an industry executive said on Monday.
State oil major PetroChina (0857.HK), which operates two refineries in Dalian, has started trimming refinery operations to cope with one week's closure of the main oil port. As many as six Very Large Crude Carriers, or 12 million barrels of crude oil, are set to be diverted from the port.
(Additional reporting by Fayen Wong in Perth; editing by Anthony Barker)