Oil rose a dollar to above $64 a barrel on Monday, reaching its highest level in almost two weeks, as equities firmed and the dollar fell
on expectations of a global economic recovery.

The market jumped 6.1 percent last week -- its first weekly gain in a month -- thanks to a series of positive economic data and a rally in equities due to better-than-expected U.S. corporate earnings.

U.S. crude oil for August delivery rose $1.10 to $64.66 a barrel by 1143 GMT. Prices climbed as high as $64.90, the highest since July 7. Brent crude for September added $1.00 to $66.38.

"The macro inputs should continue to dominate this week and it will be hard for crude oil to fight the combined strength of equities and weakness of the dollar," said Olivier Jakob, oil analyst at Petromatrix.

Asian shares outside Japan hit a 2009 high. European shares were up more than 1 percent. Wall Street looked set to join in, while the increase in risk appetite knocked the dollar.

Data indicating stronger fuel use in China, the second largest consumer, also supported prices, traders said. China's refiners boosted production in June to a record high, the National Bureau of Statistics said on Friday.

"The market is rather strong," said Christopher Bellew, a broker at Bache Commodities in London. "It's mainly optimism about demand and possibly a return of the funds."

In a sign that investors were now more bullish on oil prices, crude oil speculators on the New York Mercantile Exchange increased their net long positions in the week to July 14.

Oil hit a 2009 high of $73.38 on June 30, up from a low of $32.40 reached in December, boosted in part by supply curbs from the Organization of the Petroleum Exporting Countries.

Still, with oil prices having rebounded last week, some analysts are cautioning against excessive bullishness.

World oil demand is contracting this year and is only expected to post modest growth in 2010.

"As was the case with the March-June upward trend and the subsequent correction, price action in recent days has been, in our view, driven by non-fundamentals," said Michael Wittner of Societe Generale in a report.

"When prices are being driven by non-fundamentals, we are cautious, and doubly so when trying to call a turn," Wittner said, adding technical analysis indicated another downward move should be expected this week.