The price of oil climbed above $101 a barrel Tuesday on expectations that cold weather in the U.S. and steady Chinese growth will underpin demand.
By early afternoon in Europe, benchmark U.S. crude for March delivery was up $1.04 to $101.34 a barrel in electronic trading on the New York Mercantile Exchange.
Due to the President's Day holiday, the contract's last physical settlement was Friday, when it fell 5 cents to close at $100.30.
Severe cold weather in the U.S. has been boosting energy prices. The U.S. East Coast is expected to get more snow, and the cold is extending to other states.
"Another snowstorm in the U.S. is likely to keep heating demand at a high level and spark a further decline in the already severely diminished stocks of heating oil and natural gas," said analysts at Commerzbank in Frankfurt in a note to clients.
Optimism that China's economy is still healthy after credit growth increased in January also helped lift energy prices.
Meanwhile, a new round of talks began Tuesday between Iran and six world powers on finalizing a deal to control Iran's nuclear program. The outcome could have an effect on oil prices as Iran is a major oil producer and reduction of sanctions would allow the country to export more of its crude.
A weaker dollar also supported oil prices by making commodities like oil cheaper for traders using other currencies. On Tuesday, the euro was up 0.3 percent at $1.3747.
Brent crude, a benchmark for international oils, was up 72 cents to $109.80 on the ICE Futures exchange in London.
Among other March futures contracts trading on Nymex:
— Wholesale gasoline rose 3.03 cent to $2.8356 a gallon.
— Heating oil added 4.08 cents to $3.119 a gallon.
— Natural gas gained 27.7 cents to $5.491 per 1,000 cubic feet.