Oil rose more than 2% to touch two-month highs over $81 a barrel as cold weather battered the US and other big consumer regions, driving up demand for heating fuel.
Frigid temperatures are expected to drive up U.S. heating demand to 21 percent above normal, with consumption in the U.S. Northeast, the largest heating oil market, seen up 11 percent above average levels.
Unusually cold weather in Britain is expected to continue into the second half of January after the coldest December since 1995, said the UK's official weather center.
Colder temperatures in Europe were seen gradually spreading from the northeast to southwest during the next few days, boosting energy consumption.
Heavy snows and biting cold also hit parts of Asia, with unusually harsh winter weather snarling up transport across north China, South Korea and India.
Heating oil futures led the US oil complex higher, with U.S. crude for February delivery trading up $1.92 to $81.28 a barrel, after earlier touching $81.68, the highest level since 23 October.
Brent crude climbed $1.93 to $79.86 a barrel.
Markets were also keeping a close eye on an oil pricing dispute between Russia and Belarus that briefly cut off supplies to the Eastern European nation.
Russia has resumed supplies to refineries in Belarus, but tensions are still simmering.
Belarus officials earlier warned it may cut electricity supplies to Russia, ratcheting up tensions in the dispute that broke out on New Year's Eve and raised the specter of another winter of supply disruptions for European Union customers.
Positive economic data from China and India added to the bullish sentiment.
