Brent crude futures were up 60 cents to $108.61 a barrel by 0950 GMT, rebounding from last week's dip. US crude was up 43 cents to $86.22 a barrel.
Analysts said riskier assets such as oil were being boosted by market expectations that the US Federal Reserve will unveil fresh stimulus measures later today.
Markets expect the Fed to expand its current asset purchase scheme, committing to buy $45 billion of US debt, and extend its purchases of mortgage-backed debt, to help sustain the fragile US economic recovery.
"The market has absolute confidence this will happen and it will be extremely disappointing if it doesn't come," said Filip Petersson, a commodity strategist at SEB in Stockholm. "It's risk on for this reason."
The expectation of fresh stimulus measures is weighing on the dollar, which has trended downwards against a basket of currencies this week.
A weaker dollar makes commodities priced in dollars more affordable for holders of other currencies.
European shares and the euro, plus other commodities such as copper and gold, are also being underpinned by the stimulus hopes, reflecting the general improvement in market sentiment.
Center>Copyright Reuters, 2012