Crude prices bounced 2 percent on Tuesday as new orders received by U.S. factories rebounded in May.
Light, sweet crude for August delivery gained 1.95 dollars, or 2.05 percent to settle at 96.89 dollars a barrel on the New York Mercantile Exchange. It was the first time that U.S. crude benchmark went back above the level before the International Energy Agency's strategic reserve release on June 23.
Crude investors were encouraged by the Commerce Department's report that showed the U.S. new factory orders for May rose 0.8 percent after 0.9 percent decline in April. Although it still missed economists' estimation of 1 percent increase, it showed the improving situation in manufacture and so generated optimism among market players.
Oil also got lift as Barclays Capital raised its 2012 forecast for Brent crude by 10 dollars to 115 dollars a barrel, and for U.S. crude by 4 dollars to 110 dollars a barrel. The bank said this projection is based on the forecasts of further reduction in global spare capacity in 2012.
But the news that Moody's Investors Service cut Portugal's credit rating into junk territory pressured the crude markets. Oil prices pared earlier gains as the dollar rose against the euro.
In London, Brent crude for August delivery also rose nearly 2 percent and last traded above 113 dollars a barrel.
