--Oil futures rally with equities after holiday weekend
--Iran concerns shift, now underpin crude prices
--Market shakes off low U.S. consumer confidence figure
By David Bird
Crude oil futures prices hit a one-week high above $92 a barrel at mid-morning, rallying with equities after falling to seven-month lows last week.
"It is clear that investors spent the long U.S. holiday weekend thinking that recent price weakness represented a buying opportunity," said Tim Evans, analyst at Citi Futures Perspective.
The market shook off a disappointing report on U.S. consumer confidence. U.S. consumers in May were less confident as their views on labor conditions deteriorated, according to a report released Tuesday.
The Conference Board, a private research group, said its index of consumer confidence dropped for a third straight month, to 64.9 this month from a revised 68.7 in April, first reported as 69.2. Economists surveyed by Dow Jones Newswires expected a reading of 70.3.
Crude futures dropped last week to seven-month lows under $90 a barrel on concerns over Greece's economic instability and hopes for a breakthrough in talks between major global powers and Iran over its nuclear program.
Now the thinking on the those issues has shifted, with the focus moved to mid-June when Greek elections are set to take place, along with the next round of Iran talks, traders said.
Prices eased from highs but show signs of holding well above $90 a barrel.
"We're seeing some strength from the strong equities market and their support at $90 for crude," said Andy Lebow, an energy trader at Jefferies Bache LLC.
High hopes for a breakthrough in talks between major world powers and Iran over its nuclear program ended with an impasse last week. Hopes of an agreement helped push crude below $90 a barrel, to its lowest level since last October. New talks are scheduled next month in Russia, ahead of a European Union embargo on Iranian oil imports set to go into effect July 1. Iran repeated its past tough stance on the nuclear issue over the weekend, while U.N. nuclear officials reported indications that Iran has moved closer to possessing materials for automatic weapons.
Light, sweet crude oil for July delivery on the New York Mercantile Exchange climbed to a high of $92.21 a barrel, but was recently trading 97 cents higher at $91.83 a barrel. July ICE Brent crude was 10 cents higher at $107.21 a barrel, after a high of $107.95.
Although the world oil market is "better supplied" than in other recent times, world oil-market conditions could swiftly change this summer as Iran sanctions bite into supply, potentially compelling the International Energy Agency to tap global emergency stockpiles, an IEA official said.
David Fyfe, head of the agency's oil industry and markets division, said no such moves are currently under way.
Iranian oil delivered to the market in April was 1 million barrels a day below the 2.5-million-barrels-a-day average level for the whole of 2011, according to preliminary IEA data, as sanctions take hold, Fyfe said. But what happens in the next month or two will be crucial--particularly if more data show that is a trend or reveal an even larger hit to Iranian supply after a European embargo of Iranian oil takes effect July 1, he said.
Weekly U.S. oil inventory data from the Energy Information Administration will be released at 11 a.m. EDT Thursday, one day later than usual, because of the Memorial Day holiday celebrated Monday.
June heating oil was 0.56 cent higher at $2.8344 a gallon.
June reformulated gasoline blendstock futures were 2.36 cents higher at $2.9165 a gallon.
Both contracts expire at Thursday's settlement.
-By David Bird, Dow Jones Newswires; 212-416-2141; email@example.com