Crude ends higher, above $71, on recovery hopes

NEW YORK (Reuters) - U.S. crude futures ended more than 3 percent higher on Monday on growing economic recovery optimism after Wall Street rose on data showing the manufacturing sector in the United States shrank at a slower pace in July.

In London, Brent crude hit a 2009 high above $73 a barrel.

"The weak dollar and the manufacturing data are big boosts to the energy markets today. Still, I feel that the market has gathered so much momentum and crude may be overpriced at this point," said Phil Flynn, analyst at PFGBest Research in Chicago.

The Institute for Supply Management's manufacturing index rose to 48.9 in July, up from 44.8 in June and the highest since last August.

U.S. stocks rose on the ISM data and briefly pushed the broader S&P 500 Index .SPX to its highest level in nine months, above the psychologically important 1,000 level. .N

World equities hit a 2009 high on banking news from Europe and strong Chinese economic activity indicators.

The dollar tumbled to the lowest since September against a basket of major currencies, as the equities rally and encouraging global economic data lessened the greenback's safe-haven appeal.

PRICES

* On the New York Mercantile Exchange, September crude settled up $2.13, or 3.07 percent, at $71.58 a barrel, the highest settlement for front-month crude since June 12's $72.04.

* It traded from $69.09 to $72.20, the highest since the June 30 high of $73.38, which was a 2009 peak and the highest intraday front-month price since crude hit $75.69 on October 21.

* In London, September Brent crude ended up $1.85, or 2.58 percent, at $73.55 a barrel, the highest front-month close since October 14's $74.53. It traded from $71.50 to $73.95, a 2009 peak, and the highest intraday since prices hit $75.04 on October 15.

* NYMEX September RBOB settled 5.67 cents, or 2.82 percent, higher, at $2.0693 a gallon, trading from $2.01 to $2.0855, the highest since June 16's intraday high of $2.1124.

* NYMEX September heating oil finished up 3.88 cents, or 2.12 percent, at $1.8713 a gallon, trading from $1.8256 to $1.8920, the highest since the intraday peak of $1.9212 on November 14.

* The September/September RBOB crack spread ended at $15.33, up from $15.08 on Friday. The September/September heating oil crack spread ended at $7.01, down from $7.51 on Friday.

* The spread between the current front month and the five-year forward crude contract ended at $15.02, narrowing from $16.79 on Friday. The September 2014 contract settled at $86.60, up 36 cents, or 0.42 percent.

TECHNICALS

NYMEX crude 10-day/20-day moving average: $67.12/$64.25

Technical support/resistance:

NYMEX crude: $68.00/$73.38

NYMEX heating oil: $1.80/$1.8850

NYMEX RBOB: $2.00/$2.1124

MARKET NEWS

* The ISM's manufacturing index could top 50 next month, if it stays on its upward trend, said Norbert Ore, chair of the ISM manufacturing business survey committee.

* China's factory output surged a fourth straight month. Two of Britain's biggest banks emerged from a year of financial turmoil in profit but hurt by bad debts.

* China's crude oil stocks declined in June from a record high in May, while fuel inventories held by major oil companies piled up, suggesting local fuel demand failed to keep pace with record crude runs that drew down stocks.

* OPEC oil supply likely rose in July, a Reuters survey showed.

* A preliminary Reuters poll of analysts ahead of weekly inventory data showed forecasts for a 1.0 million barrel increase in crude stocks, a 1.1 million barrel gain in distillate supplies and a 1.6 million barrel drawdown in gasoline inventories.

(Reporting by Gene Ramos and Robert Gibbons; Editing by Walter Bagley)