Oil prices leapt higher Friday, with New York prices ending above US$71, as rising stock prices and a rebound in US new home sales last month boosted optimism about economic growth.
Oil markets have been rattled in recent weeks by the lingering US housing crisis and fears that it could crimp growth in the world's biggest oil consuming-nation.
New York's main oil futures contract, light sweet crude for delivery in October, closed up a strong US$1.26 at US$71.09 per barrel.
In London, the price of Brent North Sea crude for October delivery settled up US$0.76 at US$70.62 per barrel.
US economic news helped underpin the gains.
The government said sales of new US homes rose an unexpected 2.8 percent last month to an annualized pace of 870,000 properties from the prior month. The report defied most economists' forecasts that sales would decline, but analysts said sales are still likely to remain weak in coming months.
A separate report on orders for big-ticket manufactured durable goods such as cars, planes, computers and household appliances, also delivered a good showing as orders rose 5.9 percent in May.
Oil prices "rallied on the durable goods report which has installed some degree of confidence back into the market," MF Global vice president Bob Yawger said.
World stock markets have been rocked in recent weeks by concerns about a credit crunch sparked by the ailing US housing market. Traders are concerned about the impact on world economic growth -- and crude oil demand.
Oil prices had fallen earlier Friday as traders expressed relief that Hurricane Dean had spared vital offshore energy installations in the rig-heavy Gulf of Mexico.
As Hurricane Dean bore down on Mexico this past week, state oil company Pemex had evacuated all 18,000 personnel from its installations in Gulf waters, causing a production drop of 2.65 million barrels a day.
On Wednesday, New York crude had dipped to US$68.63, its lowest point since late June, after the US Department of Energy revealed that US crude inventories rose by 1.9 million barrels last week.