Oil rallied to an eight-week peak above $82 a barrel on Monday, near its highest this year, buoyed by a weaker dollar and signs of an economic recovery in top oil consumer the United States.
Currency movements could set the direction for prices as demand strength may be unclear during the recovery, analysts said. Some predict the market could soon briefly revisit its 2010 high near $84 a barrel.
"We very well could retest the 2010 highs of $83.95," MF Global analyst Edward Meir said.
"However, our belief is that should we get there, a rather substantial correction will set in, sending prices back into the mid-to high $70 range, as some of the long money comes off the table."
U.S. crude was up 68 cents at $82.18 a barrel by 0855 GMT, after touching $82.41, the highest since $83.95 on Jan. 11. Brent crude was up 70 cents at $80.59 after hitting $80.78, the highest since Jan. 12.
The dollar index was down 0.29 percent, making oil cheaper for holders of other currencies. European stocks gained for a seventh straight session, helped by easing investor concern about Greece's debts.
French President Nicolas Sarkozy promised Greece on Sunday that euro-zone countries would help it overcome its financial problems and vowed a crackdown on speculators who Athens blames for its woes.
New York crude rose more than 1 percent on Friday, helped by a government report that showed the United States lost fewer jobs than expected in February. Speculators have also been betting on rising prices.
Money managers extended their net long crude oil futures positions on the New York Mercantile Exchange in the week to March 2, the Commodity Futures Trading Commission said on Friday.#
Oil was further supported on Monday from news that China will build two strategic oil reserve bases — a development likely to underpin demand in the world's second-largest consumer
With global demand expected to revive in 2010, the Organization of the Petroleum Exporting Countries looks set to keep its production target unchanged when it meets on March 17, as it has for more than a year.
Oil is slightly above the $70-$80 range that many in OPEC have said they prefer.
