Oil rises sharply on better eco data

Oil prices have risen sharply, extending the previous day's rally on the back of upbeat United States' economic data and easing concerns over China's liquidity crisis.

New York's main contract, West Texas Intermediate light sweet crude for August, closed at $US97.05 a barrel, adding $US1.55 from Wednesday's close.

In London trade, Brent North Sea crude for delivery in August gained $1.16 to settle at $102.82 a barrel.

Data releases suggested US economic growth remained at a moderate pace: consumer spending rebounded in May from April's fall, incomes were higher, inflation pressures remained low, new jobless claims were slightly improved, and pending home sales were strong.

"It was pending home sales that caused oil bears the most damage as it surged 6.7 per cent in May, easily beating expectations for a 1.1 per cent rise," said Fawad Razaqzada of GFT.

The oil market also rallied as Wall Street pushed higher for a third day, with bond yields falling again on easing worries that the Federal Reserve will soon cut back its stimulus program.

The gains tracked a similar uptick in Asian equity markets after the US Commerce Department slashed the estimate of first quarter growth from 2.4 per cent to 1.8 per cent on Wednesday.

The market took the weaker economic data to mean the Fed will maintain its $85 billion-a-month bond-buying program.

Fed chairman Ben Bernanke last week said the US central bank could begin to wind down the bond purchases if the economy continued to improve.

Prices were also supported by assurances from China that it would move in to stabilise a liquidity crisis that had gripped the country's financial markets.

The People's Bank of China said on Tuesday it had made money available to some firms in a bid to prevent a cash crunch that had sent shares into a tailspin.