Oil futures snapped a six-session losing streak Monday, lifted by brisk gains in the equity markets and signs that Greece's departure from the euro zone appears less likely.
Light, sweet crude for June delivery settled $1.09, or 1.2%, higher, at $92.57 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled $1.67, or 1.6%, higher, at $108.81 a barrel.
Oil futures chased U.S. stock markets higher after the Group of Eight leading industrialized nations affirmed over the weekend that it wanted Greece to remain in the euro zone.
Meanwhile, Greece's conservatives gained ground in weekend polls, suggesting that the country could produce a government that meets Europe's terms for remaining in the single currency.
"The market is following the stocks a little bit and we're getting a little more optimistic that the world isn't falling apart," said Phil Flynn, analyst at brokerage PFG Best in Chicago.
The Standard & Poor's 500 Index recently rose 1.3%, to 1312.81, also snapping a six-session drop. Oil futures often rise and fall in tandem with equities, which traders look to for guidance on broader economic sentiment.
Monday's gains marked a rare bounce for oil futures, which have fallen 12% in May on the back of an array of bearish macroeconomic developments. In recent weeks, political turmoil in Greece has raised fears that the country could soon exit the euro zone, which analysts fear would touch off a broader crisis that puts the currency union in jeopardy, ultimately curbing economic growth and oil demand.
Meanwhile, the recent thaw in tensions with Iran has also fed the sell-off. On Wednesday, Tehran is set to meet in Baghdad with delegations from the five permanent members of the United Nations Security Council, plus Germany, to continue discussions over its nuclear program.
The summit follows a meeting last month in Istanbul and offers hope that a diplomatic solution to the nuclear stand-off remains a possibility. Western countries worry that Iran is developing nuclear technology in order to build a bomb, while Tehran claims its program is for peaceful purposes.
"To me, it looks like Iran is going to get a free pass," said Tony Rosado, broker at GA Global Markets in New York, suggesting that negotiations were likely to be productive.
The European Union is set to fully implement an oil embargo on Iran starting July 1. If Iran backs down from its nuclear program and the E.U. scales back or calls off its embargo, prices likely have further to fall.
"If the talks with Iran go well, there's a possibility prices could continue their downtrend," Flynn said.
Front-month June reformulated gasoline blendstock, or RBOB, settled 5.06 cents, or 1.8%, higher, at $2.9401 a gallon. June heating oil settled 3.03 cents, or 1.1%, higher, at $2.8603 a gallon.