The market shook off early losses caused by weak economic data from China and turned positive as euro zone leaders were set to give their financial rescue fund new powers to help Greece overcome its debt crisis, easing concerns that have weighed on oil and other markets in recent weeks.

"Expectations that the debt problems in Europe could be resolved has sent the euro rallying, weakening the dollar," said Tom Knight, trader at Truman Arnold in Texarkana, Texas.

"The stock market is also up on those hopes, also a factor in support of oil's rise today."

Further support came from upbeat data showing factory activity in the US Mid-Atlantic region bounced back in July, as well as news members of the IEA decided against releasing more oil stockpiles despite the threat of high prices to the economic recover.

Brent traded up 63 cents to $118.78 a barrel at 12:05 a.m. EDT (1605 GMT). US crude rose $1.49 to $99.89 a barrel. US futures briefly topped $100 a barrel for this first time since June 10, breaking out of this month's trading range between $93 and $99 a barrel.

Traders have also been eyeing US efforts to avoid a potentially disastrous debt default, with pressure mounting on the White House and Congress to speed efforts to cut a deficit-reduction deal.

The IEA shocked oil markets in June, announcing it would release 60 million barrels of oil to help replace disruptions of Libyan supply and bring down prices. Prices initially plunged, but in the month since the announcement, Brent prices have climbed back more than $10 a barrel.

But on Thursday, the energy watchdog for the industrialized nations confirmed what many analysts had expected, saying not a single one of its 28 members had asked for more oil to be released, including the United States, one of the architects of the first release a month ago.

"The IEA's statement that it will not release more emergency oil at this time is, in my view, bullish for the market, although there has been talk that they would do just that." said Phil Flynn, analyst for PFGBest Research in Chicago.