Crude oil prices rose back towards six-month highs on Monday, as demand sensitive assets were boosted after Greece approved an austerity bill to secure a second bailout.

Equities, commodities and the euro all rose as the Greek parliament approved the bill, lifting the threat of a default that would have jolted markets.

Front-month Brent crude was up 93 cents to $118.24 at 1230 GMT (7:30 a.m. EST). The benchmark gained 2.6 percent last week, posting its third straight weekly rise. U.S. crude was up 92 cents at $99.59 a barrel.

The dollar index .DXY fell 0.5 percent. A weaker U.S. currency supports dollar-denominated oil by making the commodity cheaper for consumers using other currencies.

Oil was near highs not seen since the start of August, as more encouraging data from the United States and China improved the demand outlook.

Tension between Iran and the West, which has triggered a forthcoming European Union oil embargo, and violence in Syria have spurred a risk premium and worries about supply.

I think it is a given that Europe will have virtually zero growth this year, but that the recovery in the U.S. and demand from China, India, etc will keep oil prices high, said Christopher Bellew at Jefferies Bache.

The European debt situation still has potential to worry investors and pressure assets like oil this week.

Greece must still detail how a further 325 million euros of spending cuts will be reached, and give binding assurances the full plan will be implemented before euro zone finance ministers meet on Wednesday.

Bellew said further scares in Europe could see the price move back to around $112 per barrel. But really there is more risk to the upside with chaos in Syria and much less oil coming out of Iran.

Investors are also worried that tension in the Middle East will worsen after Iranian President Mahmoud Ahmadinejad said on Saturday the Islamic Republic would soon announce advances in its nuclear program.

The nation is looking to showcase its nuclear capabilities to the rest of the world in the coming days, which we think could provide additional support to oil prices in the region as tensions flare, analysts at ANZ said in a report.


There were mixed messages for the outlook on oil demand coming out of Asia.

Data out of Japan showed the economy of the world's third-biggest oil consumer shrank in the October-December quarter, partly due to slowing global growth.

Japan's fourth contraction in five quarters pushed down economic output for the whole of 2011, marking the first for a calendar year since the global financial crisis of 2009.

The numbers supported the International Energy Agency's (IEA) view of oil demand growth slowing because of an overall weak global economy. The IEA reduced its forecast last week, in its sixth consecutive monthly cut, by 250,000 barrels per day (bpd) to 800,000 bpd.

But prices were supported by comments by China's Premier Wen Jiabao in state media on Monday that the world's second-largest economy will start to fine-tune economic policies in the first quarter, the most explicit indication yet of further easing of monetary policy.

The comments come days after data showing China's crude imports in January reached the third highest level on record as state refiners increased processing after several new refining facilities began operations.

Later on Monday President Barack Obama is scheduled to submit to the U.S. Congress his fiscal 2013 budget proposal to chart a fiscal path for the next 10 years.