Oil jumped more than 2 percent toward $74 a barrel Monday, the highest in over six weeks, on optimism about the pace of global economic recovery and indications of stronger oil demand.
Crude gained 2.6 percent last week, bolstered by a falling dollar. The International Energy Agency raised its oil demand forecasts and a Reuters survey showed Chinese refineries will keep crude processing at record levels in October.
U.S. crude rose $1.87 to $73.64 by 1342 GMT (9:42 a.m. EDT). It climbed as high as $73.81, the highest since it reached a 2009 peak of $75.00 on August 25. Brent crude added $1.86 to $71.86.
The break above $70 has been important as it moves the market into a new and higher trading range, said Christopher Bellew, a broker at Bache Commodities, referring to Brent.
The better Chinese demand figures published last week and the resilience of equities and gold and a weak dollar have all contributed to this upward move in oil prices.
The U.S. dollar eased against a basket of currencies, further supporting oil, while gold rose. Dollar weakness can boost investor demand for oil and other commodities priced in the U.S. currency.
Signs emerged Monday that while world energy demand is expected to rise more strongly than forecast next year, key exporters are continuing to keep a lid on supplies for now.
Saudi Arabia, the world's top oil exporter, will keep steady in November its curbs on the contracted volumes of crude it supplies to Asia and Europe, industry sources said.
With holidays in the United States, Japan and Canada on Monday, analysts said oil prices would be largely influenced by equities. European stocks rose, as did U.S. shares. There are a lot of positive sentiments in the market because of expectations for another rally in stock markets this week as well as improved energy demand forecasts from the IEA, said Ben Westmore, a commodities analyst from the National Australia Bank.
Some of the biggest U.S. corporate names are scheduled to post earnings this week, a reality check for whether a seven-month rally in stocks this year has further to run.
(Additional reporting by Fayen Wong in Perth; editing by James Jukwey)