NEW YORK (TheStreet) -- Oil prices were rallying Thursday as they followed stocks higher following news that European officials have convinced bondholders to take 50% losses on Greek debt and expanded the bailout fund to $1.4 trillion.

There's been almost a 96% correlation between crude oil futures and the stock market over the last several months.

West Texas Intermediate (WTI) light sweet crude oil for December delivery was racing ahead by $3.37 to $93.57 a barrel, while the December Brent crude contract was gaining $2.63 to $111.54 a barrel as the dollar fell 1.1% against the euro at 71 cents.

Improved U.S. gross domestic product data also provided a much-needed boost for oil prices, with the economy growing 2.5%, as expected, in the third quarter, according to an initial reading on gross domestic product. That compares with growth of 1.3% in the second quarter.

"Certainly, the news out of Europe is short-term bullish for oil prices," says Tradition Energy's senior market research director Addison Armstrong.

"Technically, the prompt WTI contract looks like it could move up to $100 fairly easily. The dollar, which is under a lot of pressure today, is also supportive of crude."

But Armstrong says he's not celebrating just yet, because longer-term, there are still many things that need to go right over the next few weeks and months for the "European patient to be given a clean bill of health."

"There are warnings," says Armstrong, "that the rescue plan will have a negative impact on credit creation in Europe and that the region may slip into recession over the next two or three quarters."

A recession, of course, would lead to lower energy demand.

BGC Financial director Roger Volz, who says that "crude is following the global equity surge -- taking back yesterday's inventories slip," notes that WTI December prices may meet some resistance to further upside with a close at $94.90, with the resistance tension emerging at the $94.20.

Meanwhile, a settlement of $90.70 remains supportive of further short-term gains in WTI prices.

Energy stocks were rallying in premarket trading.

Apache

(APA) - Get Report

was jumping 3.1% to $100.40;

Chesapeake Energy

(CHK) - Get Report

was gaining 3.6% to $29.15;

Triangle Petroleum

(TPLM)

was up 1.1% to $5.52;

Anadarko Petroleum

(APC) - Get Report

was advancing 3.8% to $82;

EOG Resources

(EOG) - Get Report

was jumping 4.6% to $91.44; and

Cheniere Energy

(LNG) - Get Report

was rising 1.7% to $10.50.

Shares of

Exxon

(XOM) - Get Report

were rising 1.4% to $82.20 after the oil major reported third-quarter earnings of $2.13 a share, beating the average analyst estimate by a penny.

Royal Dutch Shell

(RDS.A)

reported third-quarter profit

doubled

on higher oil prices. Europe's largest oil company earned $6.98 billion in the quarter, up from $3.46 billion a year earlier.

Analysts were expecting Shell to post profit of about $6.55 billion.

Shares were unchanged at $73.27 in premarket trading.

-- Written by Andrea Tse in New York.

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Andrea Tse

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