Crude futures are higher Monday, trading above $81 a barrel, bolstered by frigid temperatures across much of the northern hemisphere.
Light, sweet crude for February delivery recently traded $1.93, or 2.4%, higher at $81.29 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.91, or 2.5%, higher at $79.84 a barrel.
The U.S. and Europe are experiencing a prolonged cold snap, lifting heating oil demand, while parts of Asia are also facing chilly weather. China is expected to see some of the lowest temperatures in decades over the next few days, the AFP reported.
"We are back from the holidays and cold weather forecasts are giving markets a boost," said Phil Flynn, analyst with PFG Best in New York, of oil's start to the new year above $80 a barrel.
He notes that there are several other bullish elements that are also adding to oil's gains, including the dollar giving back some of its earlier gains against the euro. He said this is lifting oil and other commodities. Weakness in the dollar tends to boost oil prices as it make oil cheaper to purchase by holders of other currencies.
Positive economic data was also feeding support to oil prices, with hopes that the economic recovery will increase fuel consumption.
The U.K. manufacturing sector expanded at its fastest pace in over two years in December, with the purchasing manufacturers index rising to 54.1, according to data from the Chartered Institute of Purchasing and Supply.
China's manufacturing activity also rose in December, with the HSBC purchasing managers' index showing a climb to 56.1 compared with 55.7 in November.
Traders will also be watching for the release of U.S. manufacturing data from the Institute for Supply Management, which will be out at 10:00 a.m. EST. Economists are forecasting the ISM's manufacturing PMI to show a rise to 54.0 in December from 53.6 in November .
Offering underlying support to oil prices were concerns about a possible disruption of Russian oil supplies to Belarus.
Russia is continuing to negotiate with Belarus over 2010 oil shipments, although Transneft vice president Mikhail Barkov said the "transit of oil across Belarus won't be cut under any circumstances."
But Flynn noted that disputes over Russian oil supply to Europe in recent years have been a factor in boosting oil prices and that the market will respond to any potential threats to supply.
With oil prices trading above $80 a barrel, the market could look to target $82 a barrel, the intraday high for 2009 set last October.
Front-month February reformulated gasoline blendstock, or RBOB, recently traded 4.90 cents higher at $2.1020 a gallon. February heating oil recently traded 6.07 cents, or 2.9%, higher at $2.1763 a gallon.