"Favorable US economic guidance has taken center stage of late in the process of temporarily pushing euro zone debt issues to the backburner," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
"Of course, the Iran factor has also facilitated some oil price strength," Ritterbusch added.
On the heels of last week's brighter US employment data, economic optimism added support for oil prices as US stocks hit a five-month high after strong import data from major copper consumer China and a bullish forecast by Alcoa pointed to a stronger global economy.
Firm technical support levels also were cited by brokers and analysts as helping keep oil's trajectory in a higher direction.
Brent February crude rose 92 cents to $113.37 a barrel by 12:48 p.m. EST (1748 GMT), pushing back above its
200-day moving average, which was $112.70, after slipping and closing below that level on Monday.
The 200-day moving average remains a key level of technical support, said Olivier Jakob of Petromatrix. First resistance was pegged at $114, where recent rallies have run out of steam.
US February crude rose $1.16 to $102.47 a barrel, having reached $103.41 intraday. Support held above the $100 level on Monday, when the intraday low was $100.10.
US crude traded at a discount of $10.88 to Brent, narrowing from $11.14 on Monday. Analysts and
brokers cited the more positive sentiment about the US economy and weak demand in Europe as among the possible factors for Brent's narrower premium.
Brent total trading volume already was 12 percent above its 30-day average in the noon hour in New York, with US turnover only 14 percent under its 30-day average.
US heating oil and gasoline futures also strengthened.
The euro rose a second day against the dollar, rebounding from a 16-month low reached on Monday as investors pared short positions and with risk appetite seen improving.
A day after Iran confirmed that it has started enriching uranium deep inside a mountain and has sentenced an American to death for spying, European Union governments agreed to move up a week to Jan. 23 a meeting of foreign ministers expected to decide on an embargo of Iranian oil.
The volume of Iranian crude oil stored at sea has risen to as much as 8 million barrels and is likely to increase as the Islamic Republic struggles with sanctions and a seasonal refinery slowdown, shipping sources said.
Japan has asked Saudi Arabia and the UAE to supply it with more oil if sanctions reduce its oil imports from Iran, Japanese foreign minister Koichiro Gemba said.
Potential supply risks also loomed in Nigeria, where trade unions began a second day of strikes to protest the removal of fuel subsidies, though the strike has so far not affected oil shipments from Africa's largest exporter.
China's exports and imports grew at their slowest pace in more than two years in December, though crude imports were up 5 percent in December year-on-year. But some analysts pegged the robust crude imports to stockpiling ahead of the lunar new year and for strategic inventories.
A slowdown in China's trade growth raised some concern about the economy of the world's second-largest oil consumer.
Crude stocks were expected to have risen slightly last week in the US, with refined products stockpiles also rising, a Reuters survey of analysts on Monday showed.
Industry group the American Petroleum Institute issues its inventory report at 4:30 p.m. EST (2130 GMT) on Tuesday.
