Oil prices rise on Europe optimism

Oil prices rose Tuesday on renewed hopes for European action to stem the debt crisis. New York's main contract, light sweet crude for September, closed its final day of trading at $96.40 a barrel, up 43 cents from Monday's close. Brent North Sea crude for delivery in October gained 94 cents to settle at $114.64 a barrel in London trade. Oil prices had been buoyed by a return of optimism on the markets in the morning. But the New York rally petered out around midday, leaving the contract to close off session highs. Again Capital analyst John Kilduff said that comments from senior members of German Chancellor Angela Merkel's party had suggested that Germany was more willing to give some leeway in the bailout of debt-wracked Greece. The comments "sent a good signal to the market, and the euro rallied," carrying oil prices higher with it, Kilduff said. A weaker US currency tends to boost demand for dollar-priced crude oil. In a quiet market lacking major economic news, traders also were reassured by a successful bond auction by embattled Spain. Meanwhile, Middle East tensions continued to support oil prices but were not a big factor in Tuesday's trade, said Jim Ritterbusch at Ritterbusch & Associates. "Markets have shown increasing nervousness over current and possible disruptions to supply, amid rising geopolitical tensions in the Middle East," said Leo Drollas of the London-based Centre for Global Energy Studies. The centre's chief economist added that "hopes of a better economic outlook in the second half of the year may also be pushing markets upwards."