Oil prices rebounded strongly on Thursday as stock markets rallied on economic recovery hopes after US aluminium giant Alcoa's surprisingly swung into profit, traders said.

New York's main contract, light sweet crude for delivery in November rallied 1.83 dollars to 71.40 dollars a barrel.

In London, Brent North Sea crude for November gained 2.07 dollars to 67.27 dollars per barrel.

Wall Street forged higher on Thursday as the market was energized by an earnings report from aluminum maker Alcoa showing a surprise return to profits.

The Alcoa report, the first from a blue-chip firm for the third quarter, offered hope that companies are regaining health as the economy improves.

The Dow Jones Industrial Average climbed 0.65 percent to 9,788.99 at 1430 GMT as Wall Street followed the rally in overseas markets.

Alcoa's report is "very positive and this really marks a strong start for the third quarter corporate earnings season," said Victor Shum of energy consultancy Purvin and Gertz.

"This sparked the stock markets... to turn up and oil has gained along with them," he added.

Alcoa announced in the United States late on Wednesday that it had swung into profit in the three months to September 30 after three quarters running of losses.

The company said its net income was 77 million dollars or eight cents a share in the quarter ended September, compared with a net loss for the second quarter of 454 million dollars or 47 cents per share.

European and Asian stock markets also jumped higher on Thursday as investors welcomed the news.

Alcoa was the first company in the blue chip Dow Jones Industrial Average index to announce results for the third quarter. It had been expected to report a loss excluding special items of nine cents a share.

Oil market traders meanwhile also digested news that the main armed group in southern Nigeria said on Wednesday that it would resume attacks on the oil industry when its ceasefire expires on October 15.

The Movement for the Emancipation of the Niger Delta (MEND) dismissed a government amnesty programme as a "charade" and warned it would no longer limit its attacks on pipelines.

Oil prices have also won support this week on a report that Gulf states considered dropping the greenback for oil transactions.

Britain's Independent newspaper on Tuesday reported that Gulf countries had held secret meetings with officials outside the region to discuss dropping the dollar for oil trade.

The countries would instead use a basket of currencies, including the yen, the paper said, citing Gulf Arab and Chinese banking sources in Hong Kong.

The report faced a series of denials by countries cited in the report, including France which described it as "pure speculation."

The Independent had reported that Gulf states, together with China, Russia, Japan and France, were considering replacing the dollar.