Oil hit an 18-month high today, breaking up above previous trading ranges and drawing in fresh inflows from investors at the start of the new quarter.
The move higher came despite a stronger dollar, which often dampens enthusiasm for commodities, and after news of yet another build in U.S. crude oil inventories.
U.S. crude for May delivery rose 70 cents to $84.46 a barrel by 0958 GMT, after hitting an intraday high of $84.62 and settling at $83.76 a barrel on Wednesday, the highest close since October 2008.
London ICE Brent climbed 73 cents to $83.43.
Crude oil futures will not trade on Friday in either New York or London because of the Easter holiday.
"Upward momentum is very strong," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. "The market is rising even with a stronger dollar and even after what were bearish figures on U.S. inventory levels."
"Money is flowing into commodities at the beginning of the new quarter from all sorts of investors, including funds."
Oil prices dipped briefly yesterday after government data showed U.S. crude inventories rose by 2.9 million barrels to 354.2 million barrels last week, their ninth straight gain. Gasoline stockpiles logged a modest but unexpected gain.
But the market soon returned to strength.
"SIMMERING TENSIONS"
"We suspect that with the dollar no longer rallying, (at least for now), commodity markets have been able to build a head of steam. In addition, simmering geopolitical tensions could also be at work," said Edward Meir at brokers MF Global.
He said talk of a possible new round of sanctions against Iran, maybe within weeks rather than months, could be underpinning the market. But he added a note of caution:
"With respect to short-term pricing trends, we suspect there might be a temporary pause in the rally," Meir said.
"Although the market will likely take this level out given the way it has been trading of late, we still would caution against joining this latest advance, tempting as it might be."
After wild swings in the past two years, oil has stabilised recently near the range favoured by members of the Organization of the Petroleum Exporting Countries between $70 and $80.
Last quarter, oil traded from a peak of $83.95 in January to as low as $69.50 a barrel in February, a range of less than $15.