This is mainly as a result of supply worries as Tropical Storm Isaac threatened to interrupt most US offshore oil production in the Gulf of Mexico.
Oil prices got a further shot in the arm from hopes of more US stimulus measures, which would boost the outlook for demand from the world’s top consumer of oil.
Brent crude futures rose $1.31 to $114.90 a barrel by Monday morning, after rising to a high of $115.50 earlier in the session. US crude was up $1.06 to $97.21.
Tony Nunan, a risk manager at Mitsubishi in Tokyo, told Reuters: “The storm will have a temporary impact on prices. But everyone is waiting for the European Central Bank and US Federal Reserve meetings ahead.
“Technically, Brent has been strong, so it looks like it’s continuing that trend after the temporary blip on Friday and simply reversing the falls.”
Oil prices fell on Friday after a report that the International Energy Agency is likely to tap strategic oil reserves as soon as September, dropping its resistance to a US-led plan.
But prices are now turning upwards ahead of the annual US Jackson Hole meeting of central bankers and economists later this week, where Federal Chairman Ben Bernanke will deliver a speech that will be scoured for clues on a third round of quantitative easing.
The markets will also look for policy signals from the euro zone ahead of a 6 September meeting of the European Central Bank.
“The markets are now getting excited on the possibility of additional monetary stimulus by the Federal Reserve,” said Ben Le Brun, a Sydney-based market analyst at OptionsXpress.
“I don’t think traders will want to be caught short ahead of the Jackson Hole meeting especially when there’s an upside risk.”
Oil prices drew support from the threat to US offshore oil production in the Gulf of Mexico from Tropical Storm Isaac, which is expected to strengthen to a Category 2 hurricane and hit the Gulf Coast somewhere between Florida and Louisiana in the middle of this week.
Meteorologists at Weather Insight, an arm of Thomson Reuters, have predicted that the storm would spur short-term shutdowns of 85% of the US offshore oil production capacity and 68% of the natural gas output.
The Gulf of Mexico accounts for about 23% of US oil production and 7% of natural gas output, according to the US Energy Information Administration (EIA).
About 30% of US natural gas processing plant capacity and 44% of the country’s refining capacity also line the Gulf Coast, the EIA said.
Other supply issues are also causing concern, including delays in Iraq’s pipeline construction which is threatening to stall production at Shell’s Majnoon oilfield for at least three months.
In Norway, oil services workers broke off wage talks with oil companies on Friday, taking the sector a step closer to its second strike within two months.
Norway’s vital oil sector was hamstrung last month when production workers held a 16-day strike over pay and the right to early retirement, driving up oil prices.
An upcoming maintenance-related drop in North Sea output and ongoing Middle East turmoil also underpinned Brent prices.
Britain’s largest oilfield, Buzzard, which is the single biggest contributor to the Forties crude oil stream and usually sets the price of the Brent benchmark, will shut next month, suspending output until mid-October.
Adding to Middle East uncertainties, Iran’s foreign minister urged delegates at a Non-Aligned Movement developing nations summit on Sunday to oppose sanctions imposed by the West on the Islamic Republic to punish it for its nuclear activities.