Oil rose to a one-month high near $71 a barrel on Monday as positive Chinese economic data and firmer equities bolstered hopes of economic recovery and higher energy demand.
The market climbed about 2 percent last week -- the third straight week of gains -- which helped to reverse steep losses in the middle of the month and brought July's monthly decline to a marginal 0.6 percent.
U.S. crude added $1.09 to $70.54 a barrel by 4:34 a.m. EDT and hit an intra-day high of $70.95, the highest since July 1 according to Reuters charts. Brent crude gained 83 cents to $72.53.
We're getting close to the resistance area for crude oil and we need the continued support of equities, said Olivier Jakob, analyst at Petromatrix. As long as this continues, the dips are going to be bought.
The latest gain brings oil within sight of the 2009 high of $73.38 set in June, where Jakob and other analysts who use past price moves to predict direction see key resistance that prices could struggle to rally beyond.
On Friday, crude rallied almost 4 percent as data showed the U.S. economy shrank at a smaller-than-expected 1 percent annualized pace in the second quarter, raising hopes the recession was easing.
The U.S. growth number has confirmed that the worst is behind us and the focus now is to find out how quick the recovery will be, said Ben Westmore, a commodities analyst at the National Bank of Australia.
China's crude stockpiles in June, including both state strategic and commercial reserves, declined 2.7 percent from a month earlier, the first fall in four months, China OGP, a newsletter run by Xinhua, reported on Monday.
Analysts said a weak dollar, which was near its lowest point this year on Monday against a basket of currencies amid increased risk appetite, would offer support to oil.
Supply curbs by the Organization of the Petroleum Exporting Countries in response to falling demand have helped crude rally from below $33 in December.
Iran's OPEC governor said prices were expected to reach $80 by January, the oil ministry website reported on Sunday.
(Reporting by Fayen Wong in Perth and Alex Lawler in London, editing by William Hardy)