Oil prices moved above $74 a barrel Monday, extending gains from last week as markets prepared for what is forecast to be the worst hurricane season in five years.
By early afternoon in Europe, benchmark crude for December delivery was up 54 cents to $74.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 58 cents to settle at $73.97 on Friday.
Trading volume was thin as markets in the U.S. and U.K. were closed for holidays.
The hurricane season officially starts Tuesday. Last week, the National Oceanic and Atmospheric Administration predicted 14 to 23 tropical storms this year, including up to seven major hurricanes.
"If this scenario were to materialize, it would be the most active season since Hurricane Katrina ravaged oil installations in the Gulf Coast in 2005," JBC Energy in Vienna said in a report.
The price rise was also sustained by the possibility that the oil disaster in the Gulf of Mexico could bring further restrictions on deepwater drilling, Commerzbank said in a report.
Last week's rally added more than $5 to the barrel price. The rise slowed, however, after debt-burdened Spain's international credit rating was cut.
Oil prices have swung in recent months between $87 a barrel and $64. U.S. economic data has pointed to improving demand but uncertainty over the debt crisis in Europe, which could check a global economic recovery, has kept investors jittery.
"Prices under $70 have clearly been seen by some investors as a buy opportunity in view of the brighter demand prospects," Commerzbank said.
Investors will be eyeing a key U.S. monthly employment report later this week for signs the economic recovery is still on track. Analysts expect the U.S. economy added about 500,000 jobs in May and the unemployment rate fell to 9.7 percent from 9.8 percent in April.
In other Nymex trading in June contracts, heating oil rose 1.28 cents to $2.0173 a gallon and gasoline gained 1.04 cents to $2.0370 a gallon. Natural gas was up 1.6 cents at $4.357 per 1,000 cubic feet.
In London, the Brent crude July contact was up 61 cents to $74.63 on the ICE futures exchange.
Associated Press writer Alex Kennedy in Singapore contributed to this report.