Oil prices surged higher for a third straight day Tuesday, hitting late-2014 peaks on hopes of rebounding global energy demand and production cuts that could curb the supply glut.
The US benchmark, West Texas Intermediate for March delivery, soared $3.48, or seven percent, to $53.05 a barrel, the highest WTI close since December 31.
In London, Brent North Sea crude for delivery in March jumped $3.16 (5.8 percent) to settle at $57.91, its best reading since December 30.
"The strong rally continues in the oil market as both Brent and WTI front-month futures extended gains and climbed higher... supported by increased appetite amid hopes of a rebound of the global oil demand in the first half of 2015," said Myrto Sokou, analyst at Sucden brokers.
WTI has gained $8.53, or nearly 20 percent, since the rally began Friday on signs the industry is quickly tightening exploration activities.
The Baker Hughes North America rig count reported on Friday fell sharply for the week to January 30, dropping by 128 rigs to 1,937 for the week to January 30. That compared with 2,393 a year ago.
Deep cuts in capital spending by major oil companies, including new announcements Tuesday by BP and BG Group, also suggested there would be tighter supplies in the future.
"A lot of factors are at play. Obviously, the capital spending cuts just keep coming, with BP, and we're seeing one of the fastest drops of spending across the sector I can remember," said Phil Flynn of Price Futures Group.
In addition, the oil market was feeling the pinch of a weaker dollar Tuesday, he said. "It's not just about supply and demand -- the dollar definitely has an influence."
Some analysts cautioned the current oil price rebound likely would not last because supplies still far outweigh demand.
"Oil ... has enjoyed the combination of weakening supply and rising demand fundamentals to maintain its surge for another day," said Chris Beauchamp, market analyst at trading firm IG.
"Oversupply does not disappear overnight, however, and the jury is still out on whether this bounce (in prices) has much further to run."