Oil prices rose half a per cent today, recouping some of the previous session's losses, supported by a weaker dollar, while positive Asian economic data also helped to brighten the global economic outlook.
US crude for May delivery rose 44 cents to $80.44 a barrel by 0233 GMT. The contract settled down 53 cents at $80.00 per barrel on Friday, bringing weekly losses to 0.84 per cent. London Brent crude gained 41 cents to $79.70.
"Oil prices are mostly getting a lift from the weaker dollar. We've also seen a fairly upbeat macro sentiment across the market in recent weeks that is lending support to oil," said Toby Hassall, an analyst at CWA Global Markets Pty Ltd in Sydney.
The dollar index was down 0.12 per cent at 81.57 against a basket of currencies, while the euro jumped in early Asian trade on Monday on continued short covering by investors, extending broad gains made late last week after euro zone leaders approved a safety net for debt-laden Greece.
Positive economic data from Japan and South Korea also alleviated some of the concerns about slowing momentum in the global economy and buoyed investors' risk appetite.
Japanese retail sales jumped the most in 13 years in the year to February due to oil price rises and the lingering effect of government stimulus, while South Korea's current account swung back to a surplus in February on brisk exports.
All eyes this week are on the US non-farm payrolls data, due out on Friday. The consensus is for a gain of 190,000 jobs in March, the second month of jobs growth since the recession started in December 2007, and the largest increase since March of that year.
On the geopolitical front, Canada will press the Group of Eight leading industrialised nations to tighten United Nations sanctions on Iran when it hosts a meeting of foreign ministers from the grouping today and tomorrow.
Having traded intra-day above $80 for the past 25 trading sessions, some traders said oil prices appear to be ready for a breakout from current levels.
However, with crude oil demand fundamentals continuing to clash with the positive macroeconomic data, analysts said prices could struggle to break out of $84 mark - the highest price struck this year.
"Apart from Chinese demand, we haven't seen enough evidence of a demand recovery. Given the anaemic demand recovery in the US and Europe, the underlying crude demand fundamentals do not warrant an extension of last year's sharp rebound," CWA's Hassall said.
Oil prices could stay in the $70-80 range over the next decade, according to a report by Opec released ahead of a major oil conference this week which reiterated demand forecasts made last year.
Separately, money managers cut their net long position in crude oil futures on the New York Mercantile Exchange in the week through March 23rd, the Commodity Futures Trading Commission said on Friday.
Reuters