Oil extended a surge from the lowest level in almost six years on speculation some investors are buying contracts to close out bearish bets. Gasoline rose as a refinery strike entered a second day.
West Texas Intermediate futures gained as much as 4.8 percent while Brent increased as much as 5 percent before paring those advances. Hedge funds and other speculators held the largest number of short contracts in WTI in four years. Oil rallied 8.3 percent on Friday as drillers pulled 94 rigs from U.S. fields last week, the most on record. Gasoline jumped to a five-week high.
"Traders are stepping in and buying the market again," said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. "This is a continuation of some of the short-covering that we saw on Friday. The market is watching for signs of slowing oil production."
Oil prices fell to the lowest level since 2009 last month as the U.S. pumped the most in three decades and OPEC kept its own supplies unchanged to defend its share of the global market. The strike by oil workers at plants accounting for 10 percent of U.S. refining capacity continued Monday in the biggest walkout since 1980.
WTI for March delivery rose 89 cents, or 1.8 percent, to $49.13 a barrel at 9:30 a.m. on the New York Mercantile Exchange after reaching $50.56. The volume of all futures was more than double the 100-day average.
Brent for March settlement increased $1.06, or 2 percent, to $54.05 a barrel on the London-based ICE Futures Europe exchange after rising to $55.62. The European benchmark crude traded at a premium of $4.75 to WTI.