Brent crude futures were up $2.02 to $110.03 a barrel by 1450 GMT, rebounding from last week's dip. US crude was up $1.19 to $86.98 a barrel.
Analysts said riskier assets such as oil were getting a boost from market expectations the US Federal Reserve will unveil a fourth round of stimulus measures later in the day.
"Some players are making a squeeze into the Fed's announcement tonight," said Bill Hubard, chief economist at Markets.com. "The feeling is that the Fed will do what it has to to move the US economy along."
The buying activity offset OPEC's agreement to hold its output target steady despite forecasts for a fall in demand in the first half of 2013.
The swift meeting glossed over a future hurdle to a possible OPEC output cut in differences between Saudi Arabia and Iraq.
"Any indication of conflict around making way for Iraqi oil will be seen as bearish for the oil price," said Gareth Lewis-Davies, senior energy strategist at BNP Paribas. "But it's not explaining the price move we are seeing today."
Instead, he pointed to the weaker dollar, which was down 0.14 percent against a basket of currencies at 1447 GMT. A weaker dollar makes commodities priced in dollars more affordable for holders of other currencies.
The dollar was under pressure as markets expect the Fed to expand its current asset purchase scheme 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.
SLUGGISH DEMAND GROWTH
The picture was more bearish from a fundamental perspective, with the International Energy Agency (IEA) forecasting sluggish demand growth throughout 2013 and comfortable oil supply levels.
Abundant supply was a concern for some OPEC ministers in Vienna, where Algeria's oil minister said the Organization of the Petroleum Exporting Countries was producing too much given weaker demand and high inventories.
OPEC's production declined in November closer to its output target of 30 million bpd, led by a cut in Saudi production. But Iraq said it would not cut and that other countries should shoulder the burden of reductions if needed.
"This issue of making way for Iraqi oil will be quite important over the next year or two," Lewis-Davies said. "Saudi Arabia will continue to adjust its production to get the oil price it needs, but the cutting back will need to be greater if Iraqi oil production steps up."
Saudi Arabia increased supply earlier this year to replace a drop of 1 million bpd caused by Western sanctions against Iran.
SEB's Petersson said OPEC output had to fall or there would be even more surplus oil in the market next year and prices would come under pressure.
"It looks like there are enough supplies to cope with any pick-up in demand," Ole Hansen, senior commodity strategist at Saxo Bank, said.
"We will start the year on a relatively weak note in many regions, so oil prices are likely to stay within the range they have established over the last few months."
The market is also looking to weekly US crude oil and refined products inventory data, due from the Energy Information Administration (EIA).
"There's a lot of focus on US production, which continues to surprise," Hansen said. "Last week we had a big spike in gasoline stocks, and there have also been builds in distillates."
The US winter is forecast to be one of the warmest on record, which has put heating oil and natural gas prices under downward pressure over the last few weeks.
A Reuters poll found that analysts expect US crude oil stocks to have fallen over the week amid high refinery demand, while gasoline inventories are expected to show a rise.