| GEO Business|
| Oil prices gain on economic optimism|
| Updated at: 0135 PST, Tuesday, July 28, 2009|
NEW YORK: Oil prices extended their rally Monday amid a brighter mood on the economic outlook that sparked hopes for revival of energy demand.
New York's main futures contract, light sweet crude for September, gained 33 cents to close at 68.38 per barrel.
Brent North Sea crude for September delivery settled up 49 cents at 70.81 dollars per barrel after earlier touching 71.28 dollars -- a level last seen on July 1.
Market action came as government data showed that new US home sales leapt 11 percent in June, in a further sign of recovery for the sector at the epicenter of the global financial crisis.
The Commerce Department said sales of new one-family homes rose to a seasonally adjusted annual rate of 384,000, well above most private forecasts for a pace of 350,000.
Brian Wesbury at First Trust Portfolios said the report represented "an important part of the V-shaped recovery the US has been in since earlier this summer."
John Kilduff at MF Global said the firm tone on stock markets after a stunning two-week rally was also helping oil prices.
"Optimism is still propelling equities and that momentum is spilling over into the oil markets, as the conclusion is apparently being made that economic vitality will soon be returning," Kilduff said.
In recent weeks, a stronger-than-expected set of US corporate earnings has fueled hopes that the world's largest economy is on the mend from a recession that started late last year.
Crude prices have risen about 10 dollars in New York over the past two weeks. In Asia, strong Chinese second quarter growth of 7.9 percent has bolstered hopes that the region is also starting to shake off the slump.
After the United States, China is the second biggest energy consuming nation in the world.
"People concluded that Asia seems to have turned the corner -- now the US is also thought to be recovering," said Tony Nunan, a Tokyo-based manager with Mitsubishi Corp's international petroleum business unit.