The dollar index fell nearly half a percent against a basket of currencies, increasing risk appetite and boosting commodity prices, including oil.

The euro strengthened against the dollar, boosted by last week's euro zone agreement on emergency financial aid for Greece, but it was off its session high.

U.S crude for May delivery rose $2.44 to $82.44 a barrel at 12:34 p.m. EDT (1624 GMT), up 3 percent and having traded as high as $82.78, the highest front-month crude price since $83.09 was struck on March 17.

London Brent crude gained $2.28 to $81.57.

"Oil is moving on the dollar," said Eugen Weinberg, oil analyst at Commerzbank in Frankfurt.

"Equity markets are also higher but the dollar is much weaker against the euro and that is dragging all commodities higher," Weinberg added.

Strong US and European economic data and robust Asian indicators helped to lift equity markets. Euro zone economic sentiment increased more than expected in March.

US consumer spending rose as expected in February for a fifth straight month, but stagnant incomes pushed savings to their lowest level since October 2008.

US stocks gained on Monday as debt-stricken Greece launched a sovereign bond issue and with energy shares helping fuel the rise.

Markets were eyeing Friday's US jobs report, with economists forecasting the economy created about 190,000 jobs in March.

Trading sources reported end-of-quarter and/or end-of-month buying and several said there could be some lift to oil from concerns about the attack in the Moscow subway.

"The explosion in Russia is a culprit along with the weak dollar and there is end-of-quarter book squaring and window-dressing on Wall Street," said Stephen Schork, president at the Schork Group in Villanova, Pennsylvania.

ECONOMIC SENTIMENT China's annual economic growth will reach 12 percent this quarter, a government researcher said, as economists raised growth forecasts for the world's second-largest fuel user after strong industrial output growth last month.

Japanese retail sales jumped the most in 13 years in the year to February due to the lingering effects of government stimulus, while South Korea's current account swung back to a surplus in February on brisk exports.

Having traded intraday above $80 for the past 27 trading sessions, some traders said oil prices appear to be ready for a breakout from current levels.

However, with crude oil demand fundamentals continuing to clash with the positive macroeconomic data, analysts said prices could struggle to break out above the $84 mark - with the US crude oil 2010 peak from January at $83.95 a barrel.

Oil prices could stay in the $70-$80 range over the next decade, according to an OPEC report released ahead of a major oil conference this week.

Oil price volatility has dropped significantly and prices have been holding to a tighter range.

Money managers cut their net long position in crude oil futures on the New York Mercantile Exchange in the week to March 23, the Commodity Futures Trading Commission said on Friday.

The reduction came as US crude futures fell slightly from $81.97 a barrel on March 16 to $81.91 on March 23.