Oil rose above $72 a barrel on Monday, extending last week's rally, on optimism about the pace of global economic recovery and indications of stronger oil demand.
Crude gained 2.6 percent last week, largely bolstered by a falling dollar, and helped by firmer oil demand forecasts from the International Energy Agency and the U.S. Energy Information Administration.
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.
U.S. crude for November delivery rose $1.00 to $72.77 by 5.48 a.m. EDT. The market reached a 2009 high of $75.00 in August. London Brent crude added $1.02 to $71.02.
The U.S. dollar pared its earlier gains to trade little changed against a basket of currencies, further supporting oil. Dollar weakness can boost investor demand for oil and other commodities priced in the U.S. currency.
Signs emerged on 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 on Monday.
With holidays in the United States, Japan and Canada on Monday, analysts said oil prices would be largely influenced by equities. European stocks <.EU> had a firmer opening, but Asian shares fell.
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.
(Reporting by Alex Lawler and Fayen Wong in Perth; Editing by Keiron Henderson)