Oil prices jumped Monday in tandem with a buoyant Wall Street, buoyed by rising hopes for a global economic rebound that would boost energy demand.
New York's main contract, light sweet crude for June, ended at 54.47 dollars per barrel, up 1.27 dollars from its closing price on Friday, when it chalked up a gain of more than two dollars.
Brent North Sea crude for delivery in June added 1.73 dollars to close at 54.58 dollars a barrel in London.
John Kilduff of MF Global said prices have reached the top of a recent trading range by warned that "if momentum to move higher can not be generated, there may be an effort to move back to cash again that could lead to a sharp break lower."
Oil prices Monday were in line with the bullish share market, said Andy Lipow of Lipow Oil Associates.
Wall Street and other global markets got a lift from an upbeat report on Chinese manufacturing and US housing data that raised hopes for a global economic recovery.
Analysts at Charles Schwab & Co. said the market action came after "a positive manufacturing report in China, which fueled a strong rally in Asia, is helping improve sentiment on the Street and further the argument that the worst of the global recession may be in the rearview mirror."
The CLSA China Purchasing Managers Index, or PMI, a closely watched indicator in the world's third-largest economy, rose sharply to 50.1 in April from 44.8 the previous month. It was the first expansion in nine months.
Also helping the market were reports suggesting some improvement in the troubled real estate sector.
One report showed pending US home sales rose 3.2 percent in March after a 2.0 percent increase in February.
The index "is at a three-month high and things certainly look a bit less bad than in the dark days at the turn of the year," said Ian Shepherdson at High Frequency Economics.
In Asian trade earlier Monday, oil prices were higher as hopes that the worst is over for the global economy got the better of worries about the swine flu outbreak, analysts said.
"Expectations that the market has bottomed out has caused a lot of upward momentum in prices," said Ben Westmore, an energy analyst with the National Australia Bank.
"At the moment, oil markets and equity markets are very closely related."
Some analysts however do not expect a sustained oil price rally.
James Williams of WTRG Economics believes prices will drop "sooner rather than later.
"Prices in the 30-40 dollar range are possible. This range fits previous retracements and is consistent with the median price and the weak economy," he said.
Williams said it was "conceivable but not likely" that the OPEC cartel could cut production by enough to raise prices.