NEW YORK (Reuters) - Crude oil futures hit a six-month high on Monday as output disruptions were expected to cut into a long-standing glut in the market, while stocks rose sharply, boosted by basic materials and energy shares.
The benchmark U.S. Treasury yield rose after matching a one-month low hit Friday and the dollar ticked lower, caught between a weaker yen and a stronger euro.
Supply disruptions in Nigeria, Canada and Venezuela have most likely pushed oil production below consumption levels this month for the first time in at least two years. That means the world has started eating into the huge stockpile of oil that has knocked as much as 70 percent off crude prices between 2014 and early 2016.
The energy sector led Wall Street higher following a third-consecutive week of declines on the S&P 500.
"Oil is the catalyst but the move today wouldn't have been this big if stocks had not been this weak lately," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
He said the move in oil and other commodities "is creating a sense that there's a shot this rally could get some legs… and people hate to miss out."
The Dow Jones industrial average .DJI rose 175.39 points, or 1 percent, to 17,710.71, the S&P 500 .SPX gained 20.05 points, or 0.98 percent, to 2,066.66 and the Nasdaq Composite .IXIC added 57.78 points, or 1.22 percent, to 4,775.46.
Apple (AAPL.O), up 3.7 percent at $93.88 after Warren Buffett disclosed a near-$1 billion stake, also gave U.S. stocks a boost.
The pan-European FTSEurofirst 300 share index .FTEU3 closed down less than 0.1 percent. Volume was constrained in Europe with some bourses, including the Frankfurt Stock Exchange, closed for a holiday.
MSCI's gauge of stocks across the globe .MIWD00000PUS rose 0.67 percent.
Oil prices rose sharply, partly after Goldman Sachs said disruption to supply had seen the market flip into deficit and U.S. crude CLc1 could trade as high as $50 per barrel in the second half of 2016.
Brent crude LCOc1 hit $49.47 per barrel, its highest since early November. The international benchmark, which has risen nearly 80 percent from lows touched in January, last traded at $49.05, up 2.6 percent on the day.
U.S. crude CLc1 was up 3.6 percent at $47.87.
The yen JPY= fell 0.30 percent to 108.93 per dollar and the euro EUR= rose 0.11 percent to $1.1317. The greenback was marginally lower against a basket of major currencies .DXY, having touched a three-week high on Friday.
U.S. Treasury yields rose as prices fell despite a weaker-than-expected reading in the New York Fed manufacturing survey, as traders focused on the gains in the oil market.
"A lot of the overnight data has been kind of weak and people have just roundly ignored it," said Aaron Kohli, interest rates strategist at BMO Capital Markets in New York.
"Everyone was just focusing on crude this morning."
The U.S. 10-year note US10YT=RR fell 14/32 in price to yield 1.7516 percent, compared with 1.7050 late on Friday.
Irish yields IE10YT=TWEB touched the lowest in more than a month after Moody's Investor Services raised Ireland's credit rating to A3 from Baa1. It maintained a positive outlook on Ireland, which entered a three-year international bailout in 2011.
"The upgrade by Moody's expands the range of potential buyers of Irish bonds. Some investors, particularly in Asia, require a minimum 'A' grade from all of the three big agencies," Cantor Fitzgerald strategist Ryan McGrath said.
South Africa's rand ZAR= hit a two-month low against the dollar and government bonds ZAR186= weakened sharply after a newspaper report, denied by the government, that Finance Minister Pravin Gordhan faces arrest.
The report raised concerns of a repeat of the run on the rand and bonds in December after President Jacob Zuma changed finance ministers twice in a week.
Copper CMCU3 rose 0.4 percent to $4,645 per tonne, having hit a near three-month low on Friday.
Spot gold XAU= was little changed at $1,274.36 an ounce.
Reporting by Rodrigo Campos, additional reporting by Dion Rabouin; Editing by Nick Zieminski and Dan Grebler