Crude oil futures finished more than three percent higher Tuesday, finding support from a decline in the US dollar as upbeat economic data from the US and Germany helped brighten the outlook for oil demand.
The January contract for light, sweet crude oil climbed $3.34, or 3.6 percent, to settle at $97.22 a barrel on the New York Mercantile Exchange.
Continue Reading Below
The contract expired at the close of trading Tuesday and February crude became the front-month futures contract.
February crude closed up $3.19, or 3.4 percent, at $97.24 a barrel.
Oil found support after US Defense Secretary Leon Panetta said Iran could build a nuclear weapon within a year, prompting a "whatever is necessary" response from the US, according to Tim Evans, an energy analyst at Citi Futures Perspective.
Oil's gains Tuesday come on top of a 35-cent improvement in regular trading on Nymex Monday that snapped a three-day losing streak for the commodity.