Oil prices jumped above $US78 a barrel in Asia as China's move to end its two-year peg to the US dollar over the weekend boosted investor confidence.
Benchmark crude for July delivery was up $US1.09 to $US78.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 39 US cents to settle at $US77.18 on Friday.
The official exchange rate for China's currency stood unchanged on Monday in line with the central bank's warning the value of the yuan would not dramatically rise.
Traders anticipate a stronger yuan will make dollar-based commodities such as oil cheaper in China and bolster demand. The policy shift also suggests China's officials believe its economy is growing enough to absorb any slowdown in exports a stronger currency may cause.
"The decision signals policymakers' confidence about China's economy and, to a lesser extent, the global recovery," Capital Economics said in a report.
This should be positive for commodities and equities both in China and the rest of the world."
Oil has jumped from $US64 a barrel on May 25 as fears have eased that Europe's debt crisis will brake global economic growth.
In other Nymex trading, heating oil rose 3.02 US cents to $US2.1591 a gallon, gasoline gained 3.24 US cents to $US2.180 a gallon and natural gas jumped 7.2 US cents to $US5.069 per 1000 cubic feet.
Brent crude was up $US1.18 at $US79.40 on the ICE futures exchange.
AP