Oil prices rally on US earnings, eurozone hopes

World oil prices advanced Monday, in line with buoyant equity markets, as sentiment was lifted by solid US company results and growing hopes of a resolution to the eurozone debt crisis later this week. New York's main contract, light sweet crude crude for delivery in December jumped $1.97 to $89.19 a barrel. Brent North Sea crude for December gained $1.11 to $110.67. Global stock markets mostly rose on Monday, picking up on apparent progress at Sunday's EU summit on the eurozone crisis. Wall Street also climbed on strong earnings at Caterpillar, the world's leading construction and equipment maker, and following positive Chinese manufacturing data. Oil rose "on the back of firmer equity markets in the wake of the stronger-than-expected Caterpillar earnings, as well as optimism that we could well see a plan later this week to deal with the European debt crisis," said CMC Markets analyst Michael Hewson. On Sunday, European leaders insisted that "good progress" had been made on the sovereign debt debacle that threatens the world economy. However, they announced few details, vowing instead to reveal all at a second summit on Wednesday. French Finance Minister Francois Baroin, speaking on Monday, said he was sure a comprehensive deal to end the crisis would be agreed by Wednesday. "I'm convinced of it," Baroin told Europe 1 radio. "We know where we are going, we know that we don't want Greece to default," Baroin said, stressing that the crisis was serious and a "threat on a global scale." Leaders are concerned the 440-billion-euro ($605-billion) European Financial Stability Facility (EFSF) will be insufficient if it has to bail out a big country like Italy, so are examining ways to beef up its firepower. "On the face of it, the news that eurozone policymakers inched towards a multi-faceted plan to deal with the region's fiscal crisis over the weekend is encouraging," said Capital Economics analyst Ben May. "But we still doubt that the new plan, which is likely to be finalised on Wednesday, will be enough to bring the crisis to an end." Sentiment also got a boost from Chinese manufacturing figures showing a return to growth and easing concerns that the world's second largest economy faced a possible hard landing. The preliminary HSBC purchasing managers' index (PMI) stood at 51.1 in October, up from 49.9 in September and the first time it has gone above 50 since June. A reading above 50 indicates the sector is expanding, while a reading below 50 suggests a contraction. The data is crucial for traders because China is the biggest energy consuming nation in the world. "Crude oil prices continued the upside momentum, supported by stronger than expected economic data from China and (the) eurozone that boosted market confidence and ... risk-appetite," noted Sucden analyst Myrto Sokou.