World crude oil prices rallied on Friday after a disappointing US new-home sales report fueled speculation about the Federal Reserve's intentions to wind down stimulus.
New York's main contract, West Texas Intermediate (WTI) crude for October, closed at $106.42 a barrel, a gain of $1.39 from Thursday.
The European benchmark futures contract, Brent North Sea oil for delivery in October, added $1.14 at $111.07 a barrel in London trade.
Sales of new homes in the United States fell sharply in July and June's strong numbers were revised lower, casting doubts on the nascent housing recovery that the central bank currently views as a rare growth center in the economy.
The poor Commerce Department report raised questions about whether the Fed would go ahead with its expected announcement of stimulus tapering at its September 17-18 policy meeting.
"Strangely, we have a data set that is pretty lousy, the home sales pretty disappointing, and the market is getting higher," said Bart Melek of TD Securities.
"But it is all about tapering. If indeed the US economy is not as strong as we thought, then the Fed will not be as aggressive and taper later."
PRICE Futures Group analyst Phil Flynn said that oil was rallying because the market was looking at better prospects for demand.
"It looks like the market has priced in the taper and now is ready to focus on those old-fashioned fundamentals like supply and demand and geopolitical risks to supply," Flynn said, pointing to strong manufacturing data in China and the US that boosted demand hopes.
"Geopolitical worries also served as a backdrop for the buying," he added.
Deadly blasts in Lebanon helped to ratchet up tensions in the oil-rich Middle East.
Two powerful car bombs in the Lebanese port city of Tripoli killed 42 people and wounded hundreds in the deadliest attack since Lebanon's 1975-1990 civil war.
The attack has further stoked fears that Syria's civil war could boil over into neighboring Lebanon, whe