Crude oil futures rallied more than 4 percent on Thursday, primed by a deal on Greek debt that many analysts said bodes well for resolving the euro zone crisis.
Markets got a boost after euro zone leaders struck an agreement with private lenders for the latter to accept a 50 percent loss on their Greek government bonds.
The deal pulled up the euro against the dollar to a seven-week high and sparked a rally on Wall Street, while copper surged 6 percent.
Additional support came from data showing the U.S. economy grew in the third quarter at its fastest pace in a year, bringing relief to investors who weeks ago feared the world's largest oil consumer would lapse into another recession.
"Given the positive nature of today's GDP report, as well as settling of some European debt concerns, the path has been paved for bullish moves in coming sessions for commodity and equity prices," said Jason Schenker, president of Prestige Economics LLC in Austin, Texas.
In London, ICE Brent for December delivery rose $3.76 to $112.67 a barrel by 2 p.m. EDT. It hit a session high of $112.79, the loftiest since October 17, and pierced the 200-day average at $112.25.
U.S. December crude futures gained $3.92 at $94.12, after falling 3 percent on Wednesday following a bearish U.S. oil inventory report.
The U.S. energy complex was paced by gasoline futures, which rose more than 4 percent on short-covering ahead of the front-month November RBOB contract's expiration on Monday, traders said.
"There's a risk-on mood in the market, despite yesterday's rather bearish (U.S.) inventory report," said Carsten Fritsch, analyst at Commerzbank.
Brent's premium to U.S. crude rose back to near $19 a barrel, from $18.71 on Wednesday. It fell to $16 in heavy spread trading earlier in the week, well off a record over $28 hit on October 14.
Crude fell on Wednesday, with U.S. oil sliding 3 percent, because of a larger-than-expected 4.7 million barrel rise in U.S. inventories and caution over Europe's ability to agree on a plan to address its two-year-old debt crisis.
Early on Thursday, the market mood changed markedly after news that euro zone leaders had struck a deal in which private banks and insurers would accept a greater loss on their Greek sovereign bonds. The deal would lower Greece's debt burden and includes recapitalizing European banks and increasing the region's rescue fund.
However, a Reuters poll of economists on Thursday showed that the deal may not be enough to make Greece's debt burden sustainable.
The U.S. economy expanded at a 2.5 percent annual rate in the third quarter, the U.S. Commerce Department said, as consumers and businesses stepped up spending, creating a momentum that could carry into the final three months of the year.
The day's oil rally also benefited from expectations that China, the world's second largest oil consumer, may loosen a tight liquidity policy in the fourth quarter as growth slows, while hopes are running high that inflation has peaked.
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