NEW YORK, United States — Oil reversed direction again yesterday, rising two per cent as traders took their cues from the dollar and stock markets.

Crude oil is used to produce gasoline and other fuels, and it’s also a major investment commodity. Prices can swing with the collective mood on Wall Street. Recently benchmark oil has fluctuated between US$95 and US$99 a barrel as investors gauge how Europe deals with Greece’s debt crisis and the debate goes on in Washington over spending and the US debt ceiling.

“Every day, we hear more about what governments are doing to get their sovereign debt under control,” independent analyst Andrew Lipow said. “But you don’t see results, and that leads some people to think we’re headed in the wrong direction.”

Benchmark West Texas Intermediate crude for August delivery rose US$1.57 to settle at US$97.50 per barrel on the New York Mercantile Exchange.

Brent crude, which is used to price many international oil varieties, gained US$1.01 to settle at US$117.06 per barrel on the ICE Futures exchange in London.

The dollar fell against other currencies on Tuesday, sending some investors to commodities like oil. Oil, which is traded in dollars, tends to rise as the dollar falls and makes crude cheaper for investors holding foreign currency.

A broad stock market rally also helped push oil higher. The Dow Jones industrial average, the Nasdaq and the S&P 500 index all rose about two per cent in afternoon trading.

Some upbeat economic news supported higher oil on Tuesday as well. The Commerce Department said construction of new homes grew by 14.6 per cent last month. Builders began work on a seasonally adjusted 629,000 homes in June. That’s about half of what economists say is needed to sustain a healthy housing market. Still, analysts consider it a positive sign for the battered industry.

The housing market and the unemployment rate are key factors in the nation’s economic recovery, which most view as sluggish at best right now. When more people head back to work and buy homes, oil and gas demand is expected to rise.

Meanwhile, MasterCard SpendingPulse reported that motorists continued to cut back on gasoline in the US for the 17th consecutive week. Its weekly survey of credit card purchases estimates that Americans bought 1.1 per cent less gas than the same period last year, based on a four-week average.

In other Nymex trading for August contracts, heating oil added 2.03 cents to settle at US$3.098 per gallon, while gasoline futures gained 1.75 cents to settle at US$3.1149 per gallon. Natural gas fell 1.3 cents to settle at US$4.511 per 1,000 cubic feet.