Crude oil futures erased losses on Thursday, re-approaching a two-week high as optimism European leaders would reach an agreement to solve the region's debt crisis boosted demand for riskier assets.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD99.19 a barrel during U.S. morning trade, climbing 0.8%.
It earlier rose as much as 0.9% to trade at a daily high of USD99.30 a barrel, just below Wednesday's two-week high of USD99.35 a barrel.
European leaders meeting in Brussels outlined a plan to handle Greece's sovereign debt woes, proposing to extend loan maturities and lower interest rates for heavily indebted euro zone countries.
A draft of the proposed plan showed that the euro zone would reduce interest rates on bailout loans from the European Financial Stability Fund to 3.5%, while extending loan maturities to at least 15 years.
The plan would also allow the EFSF to make precautionary purchases in the secondary bond market.
The euro jumped to a nine-day high against the U.S. dollar, while the dollar index, which tracks the performance of the greenback against of six other major currencies was down 0.73% to trade at 74.58, the lowest since July 5.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Meanwhile, the International Energy Agency director Nobuo Tanaka said earlier that the organization was unlikely to release additional supplies from emergency stockpiles.
The IEA said the release "largely achieved" its aims after releasing 60 million barrels of oil last month in response to a loss of supplies from Libya.
Crude's earlier losses came after data showed that manufacturing activity in China fell to a 28-month low in July, raising concerns over a slowdown in demand from the world's second largest oil consumer.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery edged 0.15% higher to trade at USD118.35 a barrel, up USD19.16 on its U.S. counterpart.
By. ForexPros.com
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Forex Pros offers a diverse set of professional tools for Forex, Futures and CFDs. These include real-time data streams, technical and fundamental analysis by in-house… More