In the United States, the Institute for Supply Management said its manufacturing index indicated an expansion in factory activity was slowing. Other reports showed personal income and spending both rose more than expected in August.

Benchmark oil for November delivery added $1.10 to $81.07 a barrel in afternoon trading on the New York Mercantile Exchange. It's the first time the price has topped $80 a barrel since early August.

A drop in commercial crude inventories of 500,000 barrels last week, announced by the Energy Information Administration on Wednesday, also boosted investor optimism. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.2 million barrels.

“Oil is still riding the wave of the supportive EIA report,” Ritterbusch and Associates said in a report. “We still view the $80 area as the approximate high side of about a $10 trading range that could remain intact through most of the fourth quarter.”

Crude prices have zigzagged in the $70s for most of the last year, with short-lived peaks above $80 undermined by an uneven economic recovery in developed countries. Some analysts expect strong crude demand in emerging economies, such as China, will help push prices higher.

“Oil prices slowly but surely appear to be breaking away from the shackles of macroeconomic influence to refocus on market-specific fundamentals,” Barclays Capital said.

In other Nymex trading in November contracts, heating oil rose 2.19 cents to $2.2897 a gallon, gasoline gained 3.69 cents to $2.0730 a gallon and natural gas fell 4.7 cents to $3.825 per 1,000 cubic feet.

In London, Brent crude rose $1 to $83.31 a barrel on the ICE Futures exchange.

Meanwhile, IEA said on Friday it anticipated upward pressure on oil prices in the second half of 2011 due to a projected decline in oil stocks.

It also said the most recent round of sanctions imposed on Iran by the United States and the European Union was leading to significant delays for Iran's oil and gas developing projects.

Eduardo Lopez, a senior oil analyst for the agency's oil and industry markets division, said that if the global economy grew at an annual rate of more than 4 percent in the first half of 2011, as projected by the International Monetary Fund, oil supplies could start to be squeezed.