Oil rose above $133 a barrel Monday on persistent worries about global petroleum supplies and the outlook for the U.S. economy and the dollar.
Reports of an attack by militants on an oil pipeline in Nigeria, one of Africa's largest oil exporters, also helped boost prices.
Light, sweet crude for July delivery on the New York Mercantile Exchange was up 88 cents at $133.07 a barrel in electronic trading by late afternoon in Europe. The contract rose $1.38 to settle at $132.19 a barrel on Friday.
Nymex floor trading was closed Monday for Memorial Day and it also was a holiday in Britain, resulting in lower trading volume than usual.
The dollar has weakened over the last week after a modest recovery, and investors will be watching economic data out of the United States to be released over the next few days for further clues about the health of the world's biggest economy.
"The dollar's been swinging down again," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne, and that's "going to sway sentiment."
Oil and other hard commodities are seen as hedges against a weakening dollar and inflation. Also, a weak dollar, the currency of international oil trade, makes petroleum products less expensive to Asian and European buyers.
This week, investors will be watching for what implications U.S. consumer confidence, new home sales, gross domestic product and other economic data might have for the dollar and oil prices, he said.
"It's a pretty price sensitive week for economic data," Pervan said. "The data we're seeing out of the U.S. at the moment looks pretty weak. You'd expect that trend to continue, pushing further down on the dollar."
The dollar, one of the factors that has fed oil's rally from about $65 a year ago, was lower against the yen, but up a bit against the euro in currency trading during the afternoon in Europe after losing ground Friday in New York.
The euro slipped to $1.5764 compared with $1.5775 on Friday, while the dollar fell to 103.41 Japanese yen from 104.17 yen Friday.
Prices also were supported when militants in Nigeria, a major supplier to the U.S. market, claimed they destroyed an oil pipeline and killed 11 soldiers in a gunbattle.
The Movement for the Emancipation of the Niger Delta says it attacked the pipeline operated by a Royal Dutch Shell PLC joint venture early Monday. Shell officials were not immediately available for comment, and a military spokesman had no immediate confirmation of any overnight incidents.
Last week, a series of supply warnings shook markets, and Thursday, a report that the International Energy Agency the energy watchdog for the most industrialized nations is in the process of lowering its forecast for long-term global oil supply, sent crude futures rocketing to an all-time high of $135.09 a barrel.
Investors are also worried about a growing squeeze on global diesel supplies as demand in China surges has sparked a massive run up in heating oil prices.
Over the weekend, China's top economic planning agency again urged oil and power companies to make sure there are enough supplies for earthquake-hit areas and for the Beijing Olympic Games in August.
"They certainly want to have a buffer of supply ... so there's pressure on the upside from demand in Asia," Pervan said.
The U.S. driving season officially kicked-off with the long Memorial Day weekend there, and even if demand for gasoline and diesel is lower than it was a year ago, it will still be stronger than it was in the preceding months, he said.In other electronic trading, heating oil futures rose 7.89 cents to $3.9445 a gallon while gasoline prices rose 2.95 cents to $3.4255 a gallon. Natural gas futures rose 18.2 cents to $12.039 per 1,000 cubic feet.
AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.