Oil prices rose toward $53 per barrel on Monday, buoyed by expectations that rich nations' efforts to stimulate their economies may help end the global downturn sooner than expected.
Japan said it planned to spend at least $100 billion more to help its economy survive the global crisis, as investors seized on signs that markets may have bottomed to buy stocks and commodities.
In a sign appetite for risk is increasing, gold prices fell more than 2 percent on Monday, slipping toward a two-and-half-month low, and stock markets rose.
Japan's Nikkei stock average hit a three-month closing high and European shares rose, tracking a late rally in the United States on Friday.
U.S. light crude for May delivery was up 25 cents at $52.76 a barrel by 1100 GMT (7 a.m. EDT). London Brent crude rose 30 cents to $53.77 a barrel.
Analysts said agreement last week by G20 leaders on a $1.1 trillion deal to combat the global economic crisis had raised expectations that the downturn might not be as severe as anticipated, but this optimism could be short-lived.
The pixie dust that President Obama and the G20 sprinkled on markets last week is still working its magic, said Christopher Bellew, oil broker at Bache Commodities in London.
But I think that will blow away as people realize that there is no quick fix for this recession. I do not think the oil market will advance much further and I don't think the recent stock market strength will be sustained.
Goldman Sachs said in a note received by Reuters on Monday that crude oil price rallies would be short-lived until the second half of 2009 because of weak fundamentals.
It said recent oil price rallies had been fueled by optimism over future stabilization in the financial system and in global economic growth, but for the time being these rallies were unlikely to be sustained.
We continue to expect that a more stable demand environment, reinforced by the likely need for the industry to restock during second-half 2009, will help push the oil market into a sustained deficit later in the year, it said.
Although crude oil prices have risen roughly 16 percent so far this year, they are almost 60 percent below their high of more than $147 a barrel last July.
Analysts said investors might attempt to push oil toward the $55 mark this week, should U.S. stocks rally further on signs that the economic slump is abating and if earnings season does not get off to a rocky start.
Oil rose nearly 11 percent last month and snapped two straight quarters of double-digit decline to rally 9.5 percent in the first quarter, thanks to a rally in global stock markets and OPEC's production cuts.
Crude oil speculators on the New York Mercantile Exchange decreased net long positions in the week to March 31, data from the U.S. Commodity Futures Trading Commission showed on Friday.
(Additional reporting by Fayen Wong in Perth and Angela Moon in Seoul; editing by Sue Thomas)