Brent crude oil steadied above $109 a barrel on Monday, supported by a weak dollar, supply disruptions and a severe winter across North America that has boosted heating demand.
Speculators and hedge funds have sharply increased bullish bets on crude oil to near their highest ever, U.S. market data showed, with prices driven higher by a jump in demand for U.S. heating fuel.
The dollar languished at a six-week low against a basket of major currencies, supporting commodities such as oil that are priced in the currency.
Brent crude oil rose 5 cents to $109.13 a barrel 0900 GMT, swinging between a high of $109.40 and a low of $108.93. U.S. oil gained 50 cents to $100.80.
"The U.S. winter and weak dollar are both supporting the market," said Carsten Fritsch, senior analyst at Commerzbank. "But there is a chance of a sharp correction. The risk is limited as long as the U.S. weather stays cold. But when it gets warmer, prices could come down sharply."
(Read more: Which sector will be the bad weather winner?)
Economic data are also a risk for oil.
Disappointing U.S. figures on Friday revived worries about demand from the world's top oil consumer.
U.S. manufacturing output unexpectedly fell in January, recording its biggest drop in more than 4-1/2 years, in the latest indication the economy got off to a weak start this year.
Part of the explanation was probably the severe winter weather, but some economists are concerned that recovery may be stalling, which would curb demand for fuel.
(Read more: Industrial production down 0.3% in January)
The next set of key data is the HSBC flash PMI survey of manufacturers for February, due on Thursday.
U.S. crude oil, also known as West Texas Intermediate or WTI, has risen steadily over the last six weeks and is now close to the top of its range over the last four months.
Strategists say further gains in U.S. crude futures may be limited as refineries take plants down for maintenance.
"We expect the upward momentum in WTI to slow down if it crosses the $101 a barrel level again, partly from the weight of softening U.S. Gulf Coast balances," Barclays analysts said. "Refinery maintenance in the Gulf Coast is expected to peak at the start of March, and runs have already started to slow down."
(Read more: China's bank lending party keeps on rolling)
Oil also found support from Chinese data showing banks disbursed the highest volume of loans in any month in four years in January, a surge that suggests the world's No.2 economy may not be cooling as much as some fear.
Supply disruption fears continued to keep a floor under prices. Libya's oil production has dropped to 390,000 barrels per day (bpd) as protests have partly blocked flows from the El Sharara oilfield, the state National Oil Corp said.
Protesters led by a former anti-Gaddafi rebel have seized three oil ports in eastern Libya since August, cutting off around 600,000 bpd of export capacity, to demand more regional autonomy and a greater share of oil wealth.