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NEW YORK (TheStreet) -- Oil prices recovered thanks to bullish Wall Street commodities reports, a stronger euro and an anticipated fall in U.S. crude oil stocks.

Light sweet crude oil for July delivery added $1.89 to settle at $99.59 a barrel after closing in the red Monday. Brent crude oil for July delivery was rising $2.35 to $112.45 a barrel.

The euro was strengthening against the dollar, rising 0.5% at $1.4113, giving it more power buying power for oil, which is priced in dollars.

Goldman Sachs

has raised its 2011 Brent crude price forecast to $120 a barrel from $105 a barrel and its 2012 forecast to $140 from $120, citing a depletion in Organization of the Petroleum Exporting Countries spare oil output capacity and global stocks, due to an increase in fuel demand.

"While a sharp decline in world economic growth remains a downside risk to commodity prices, we see the current slowdown in economic growth as part of a normal mid-cycle pause, partially driven by higher commodity prices, and therefore not a reason to expect commodity prices to decline substantially," the Goldman Sachs report said.

Morgan Stanley

also raised its Brent crude forecast, citing stronger demand and a shortfall in Libyan production. The brokerage lifted its 2011 Brent crude price projection to $120 a barrel from $100 a barrel and its 2012 projection to $130 from $105.

JP Morgan

on Monday repeated its Brent crude price forecast of $130 in the third-quarter of 2011.

"We are seeing a much stronger tone set in most markets as far as today's action in concerned," says MF Global analyst Ed Meir. "Part of the rally is attributable to Goldman Sachs putting out a bullish call for commodities going forward."

"Oil prices are higher ... while the Euro has stabilized somewhat ... however, in the absence of any new developments on debt issues, we could see its weakness resume later in the week," Meir cautioned.

The euro was regaining strength against its U.S. counterpart as Germany's Ifo business climate index surprisingly held steady at 114.2 in May. Furthermore, first-quarter gross domestic product for the eurozone's largest economy was confirmed at 1.5% quarter-on-quarter, versus 0.4% growth in the fourth quarter. A successful Spanish Treasury bills auction also lifted European sentiment.

Euro gains were limited however by Greek opposition leader Antonis Samaras' rejection of the country's new austerity plan.

Commerzbank Commodity Research says some market players clearly see a price level of $110 a barrel for Brent and less than $100 a barrel for light sweet crude oil as a good buying opportunity.

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"Refineries are likely to gradually step up their low utilization at present in view of the upcoming driving season and the strong depletion of gasoline stocks, which should also support a reduction in inventories," the Commerzbank Commodity Research said.

The American Petroleum Institute is expected to report a fall in U.S. crude oil stocks late Tuesday, following last week's disruptive Alberta, Canada wildfires and the Mississippi flooding.

In other news, Iranian president Mahmoud Ahmadinejad says he will no longer be attending the OPEC meeting in Vienna on Jun. 8, and will instead be sending one of his ministers. Commerzbank Commodity Research said Ahmadinedschad's participation at the meeting would have virtually ruled out an increase in production quotas.

Shares of oil producers and oil services companies were spiking after trading in negative territory Monday.

Key Energy Services

(KEG) - Get Key Energy Services, Inc. Report

was rising 1.5% to $15.53,

Complete Production Services

( CPX) was adding 1.6% to $31.15 and

Halliburton

(HAL) - Get Halliburton Company (HAL) Report

was advancing 3.2% to $47.62.

Royal Dutch Shell

(RDS.A)

was gaining 1.5% to $68.99,

BP

(BP) - Get BP p.l.c. Sponsored ADR Report

was tacking on 0.7% to $44.35,

Statoil

(STO)

was popping 2.1% to $24.51 and

Suncor Energy

(SU) - Get Suncor Energy Inc. Report

was spiking 2.7% to $40.74.

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-- Written by Andrea Tse in New York.

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>>Search for Highest Dividends by Rate or Yield

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here:

Andrea Tse

.

>To follow the writer on Twitter, go to

Andrea Tse

.

>To submit a news tip, send an email to:

tips@thestreet.com

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