Traders work in the crude oil options pit at the New York Mercantile Exchange July 6, 2009 in New York City.

Oil prices advanced for a third straight day Friday, buoyed by positive US housing construction data that could provide a lift for the recession-mired economy.

New York’s main futures contract, light sweet crude for delivery in August, gained 1.52 dollars to close at 63.56 dollars a barrel.

In London, Brent North Sea crude for September delivery advanced 1.63 dollars to settle at 65.38 dollars a barrel. The August contract expired Thursday at 62.75 dollars.

The New York futures contract, which showed little direction at the market opening, shot up more than 3.0 percent after the US government reported housing starts and construction permits surged in June, suggesting the prolonged real estate slump may be easing.

The Commerce Department reported construction starts on privately owned homes rose 3.6 percent in June to a seasonally adjusted rate of 582,000, the fastest pace since November.

Construction permits surged 8.7 percent to 563,000, topping the consensus forecast of 524,000.

The June report “further adds to the belief that the recession is coming to an end,” said Joel Naroff of Naroff Economic Advisors.

Mike Fitzpatrick of MF Global noted that thin trade in New York ahead of the weekend may exaggerated the price spike and that some buying may be “a protection” against unexpected news over the weekend.

Renewed turmoil in oil-producing Iran after the presidential election also supported prices, he added.

Having fallen from 73.50 dollars to below 60 dollars over the course of two weeks, crude oil has now gained more than four dollars in three sessions.

“When you reflect on the violent swings in the oil market you really can see it as a reflection of the contrasting viewpoints as to where we are in the recession and how close we are to the end of the recession tunnel,” said Phil Flynn of PFG Best Research.

“The midpoint of the year is raising hopes that the end of the recession is near, yet nagging concerns over unemployment continue to temper too much optimism.”

Fitzpatrick said he did not think the oil market rally had legs.

“Everybody agrees that prices are not reflective of the fundamentals,” he said.

Source: AFP