Oil rose on Monday after a surge in new U.S. home sales cut the number of houses on the market to the lowest level in more than four decades, easing fears the post-crisis economy could slide into a second recession.
The strong numbers countered a plethora of weaker-than-expected U.S. economic data in recent weeks.
Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt, said data from the world's largest economy - national economic figures in particular - would probably dominate oil prices over the coming days.
If the U.S. data is surprisingly weak, then people might get worried about a double dip, he said.
Sales of new U.S. single-family homes rebounded strongly in June from the prior month's record low, government data showed on Monday, driving the number of houses on the market to its lowest level in nearly 42 years.
Oil prices rose after trading down on the day before the news. U.S. crude for September delivery rose 13 cents to $79.11 by 10:28 a.m. ET. ICE Brent crude was up 9 cents at $77.54.
A recent Reuters poll of 31 analysts, banks and government agencies saw U.S. crude averaging $79.44 in 2010.
Oil found further support on Monday from a rise in U.S. equities in early Wall Street trading .SPX .US. Oil prices have correlated strongly with U.S. share prices in recent weeks.
Crude prices also found support from the continuing theme of strong second-quarter U.S. corporate earnings. Cigarette maker Lorillard Inc (LO.N) reported quarterly profit that beat expectations on Monday.
News that Tropical Depression Bonnie had faded overnight limited oil price gains, although the threat of the storm did take a bite out of production in the Gulf of Mexico oil area.
The U.S. National Hurricane Center said on Monday that no tropical cyclone formation was expected during the next 48 hours.
Forecasters have said the 2010 Atlantic hurricane season, which runs from June 1 to November 30, could be the worst since 2005, when Hurricanes Katrina, Rita, and Wilma caused havoc in the Gulf Coast, damaging oil rigs and refineries and forcing sharp cuts in production.
In China, Dalian Port Co. (2880.HK) resumed operations at two of its oil berths, and its main 300,000 tonnage berth is expected to reopen soon, the company said on Sunday, after a fire at the port a week ago shut the berths down.
In a sign of bullishness on oil prices, open interest positions increased for September $85 and $90 call options on Friday from a week before as crude prices rose to near $80 a barrel before ending the session slightly lower.
(Additional reporting by Fayen Wong in Perth; editing by Jane Baird)