Oil prices jumped Monday, with Brent crude rebounding briefly above $102 per barrel, as the market was cheered by a Spanish banking bailout deal and easing Chinese inflation, traders said.
In late morning London deals, Brent North Sea crude for July advanced 94 cents to to $100.41 per barrel, having spiked to $102.21 in earlier Asian deals.
New York's main contract, West Texas Intermediate crude for delivery in July climbed 95 cents to $85.05 a barrel.
"The approval by eurozone finance ministers of financial aid for Spanish banks has brightened general market sentiment, while Chinese import figures published overnight have lent additional support."
The crude rally mirrored that of the euro, which rose after the 17-nation eurozone agreed to lend Spain up to 100 billion euros ($125 billion) to rescue its battered banks.
The Spanish bail-out package, which was agreed over the weekend, marked a dramatic climbdown for Madrid, which had denied any need for outside aid to prop up its troubled lenders.
"The crisis in Spain, coinciding with the prospect of Greece exiting the euro after elections on June 17, will dominate investor sentiment this week," it said.
Elsewhere, data released on Saturday showed China's inflation easing to 3.0 percent in May, the slowest pace in the consumer price index since June 2010.
It was also below market expectations for a 3.2 percent rise, according to a poll of 15 economists by Dow Jones Newswires.
Traders are meanwhile on tenterhooks before OPEC's regular output meeting later in the week.
The Organization of Petroleum Exporting Countries (OPEC), whose 12 member nations pump one third of the world's crude, meets in Vienna on Thursday.
At their last gathering in December, OPEC members agreed to hold actual output at 30 million barrels per day, citing an uncertain demand outlook, with extra unofficial production coming from Saudi Arabia, Iraq, Kuwait and Libya.
Experts predict OPEC this around will again make no move, keeping its official output target at 24.84 mbpd -- where it has stood for more than three years -- despite sharp price falls that have cut precious revenues.
PVM analyst Philip Wiper said that the market's reaction to the Spanish bailout would be key ahead of the OPEC gathering.
"The considered reaction to the Spanish bailout ... will be crucial to the near-term oil prices, and set the scene for OPEC later this week," said PVM analyst Philip Wiper.
"The mood will be very different in Vienna if prices are easing back up above $100 rather than $95 and falling," he added.
Source: AFP Global Edition