US September crude rose $2.59, more than 3 percent, to $81.54 a barrel by 1:02 p.m. EDT (1702 GMT), the highest price since May 5.
ICE Brent rose $2.72 to $80.90, the highest level since May 13.
US crude looks to have broken out of the $70-$80 a barrel range it traded in for most of the last three months, triggering further buying.
The growing optimism among speculative investors on the outlook for longer-term oil prices was evident in data from the Commodity Futures Trading Commission (CFTC) on Friday.
Money managers increased net long crude oil positions to the highest level since May on the New York Mercantile Exchange in the week to July 27, the CFTC said.
Tropical Depression 4 formed in the Central Atlantic Ocean, the US National Hurricane Center said, and that news also supported oil prices.
Meanwhile, global stocks surged to a 2-1/2 month high and the euro hit a three-month high on Monday as better-than-expected growth in the US manufacturing sector and encouraging corporate earnings spurred the appetite for risky assets.
The euro neared $1.32 for the first time since early May, with the single currency picking up steam after it broke a key technical level.
Earning from BNP Paribas and HSBC, two of Europe's top three banks, boosted optimism for corporate results after the release last month of a report on the health of European banks.
The Dow Jones Industrial Average was up 176.20 points, or 1.68 percent, at 10,642.14. The Standard & Poor's 500 Index was up 19.98 points, or 1.81 percent, at 1,121.58. The Nasdaq Composite Index was up 38.55 points, or 1.71 percent, at 2,293.25.
The MSCI world equity index rose 2.26 percent, reaching a two-and-a-half month high, while the Thomson Reuters global stock index gained 1.97 percent as investors built on last month's run-up. Emerging stocks rose 2.13 percent to a three-month high.
The FTSEurofirst 300 index surged 2.6 percent to reach a three-month closing high boosted by the strong results from HSBC and BNP Paribas and the US manufacturing data.
The STOXX Europe 600 Banking index surged 3.9 percent, snapping two days of losses.
The euro rose to $1.3176, up 1 percent on the day and its best level against the greenback since early May. Analysts said euro buying gained momentum after the currency broke $1.3125. That was the 38.2 percent retracement of a decline that began last November and ended in June around 1.1876, its lowest level since 2006.
The dollar edged up against the yen. The dollar rose to 86.75 yen from around 86.50 yen before the data.
The dollar index, however, hit a three-month low, hurt by worries that the US economic recovery is losing steam.
The index, which measures the greenback's value against a basket of currencies, hit a three-month low of 81.354, dipping 0.70 percent to 80.965, roughly a 50 percent retracement of its November-to-June rally.
Sterling hit a six-month high versus the dollar of $1.5820 and outpaced the euro, rising to a four-week high of 82.64 pence.
US Treasury debt prices fell, with the 30-year bond shedding a full point in price after the stronger-than-expected growth in the manufacturing sector in July.
The 30-year Treasury bond was trading one point lower in price to yield 4.05 percent, up from 3.99 percent late on Friday, while benchmark 10-year notes were 13/32 lower to yield 2.95 percent from 2.91 percent. The 2-year US Treasury note was down 1/32, with the yield at 0.5697 percent.
