Oil rose more than $2 to hit a one-month high above $71 on Monday as positive Chinese economic data and firmer equities bolstered hopes of economic recovery and higher energy demand
U.S. crude added $2.05 to $71.50 a barrel by 1314 GMT, having hit an intra-day high of $71.55, the highest since July 1 according to Reuters charts. Brent crude gained $1.72 to $73.42.
We are 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.
European shares hit a new high for 2009, led by banks. <.EU>
U.S. stocks headed for higher opening. <.N>
The latest gain in oil prices 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 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.
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 [nPEK147641].
Analysts said a weak dollar, which slid to 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 since last year in response to falling demand have helped crude rally from below $33 in December.
However, output from 11 members from the OPEC rose slightly in July, lowering its compliance rate to its agreed supply curb to 71 percent from 72 percent in June, a Reuters survey showed.
(Reporting by Fayen Wong in Perth, Alex Lawler and Ikuko Kurahone in London, editing by Peter Blackburn)