Oil rose toward $53 a barrel on Monday to the highest in almost four months, supported by a weak dollar, after the United States gave details on its plan to remove toxic assets from bank balance sheets.
The U.S. government fleshed out the plan on Monday which it hopes can purge banks of up to $1 trillion in toxic assets, a key element of its drive to pull the world's biggest economy out of a deep recession.
U.S. crude rose 64 cents to $52.71 a barrel by 0951 GMT (5:51 a.m. EDT) having earlier climbed to $52.90, the highest price since December 1. London Brent crude rose 62 cents to $51.84.
Oil has climbed from below $33 reached last December, lifted also by supply cuts by the Organization of the Petroleum Exporting Countries. Some analysts say a prolonged rally will depend on a boost in demand for fuel.
"The recent inclination to bid up commodities as both an inflation hedge and a weak dollar play is clearly what is driving the energy market," said Edward Meir of MF Global in a report.
"This approach will ultimately prove unsustainable in the absence of a rebound in industrial demand."
The U.S. dollar eased on Monday, a trend that can boost investor demand for oil and other commodities. Stock markets around Asia rose and European bourses opened higher.
President Barack Obama said on Sunday the U.S. dollar is still strong but warned that excessive borrowing and high deficits could weaken Treasury bill demand.
The U.S. Treasury Department said Secretary Timothy Geithner would hold a briefing at 8:45 a.m. (1245 GMT) on Monday to talk about efforts to stabilize the financial system.
Despite crude's rally, it remains down almost $100 from a record high near $150 reached last year as the global economic crash eroded consumption.
The global economy is set to shrink by 1 to 2 percent this year, World Bank President Robert Zoellick said on Saturday. He said the depth of the slowdown was unprecedented since the 1930s Great Depression.
In a further sign of weakening demand, crude imports into China, the world's No. 2 oil consumer, fell 18 percent from a year ago in February, customs data showed.
Oil workers at Brazilian energy firm Petrobas began a five-day strike on Sunday in a bid to cut crude output in protest over job cuts, pay and conditions, a union leader said.
