Oil began 2010 with a bang on Monday, jumping above 81 dollars on expectations of higher energy demand in the northern hemisphere winter and after Russia cut supplies to Belarus, traders said.

New York's main futures contract, light sweet crude for delivery in February, spiked to 81.68 dollars per barrel, a level last seen in October. It later stood at 81.25, up 1.89 dollars.

Brent North Sea crude for February rose 2.02 dollars to 79.95 dollars in London trading. It had earlier risen as high as 80.13 dollars.

"Crude oil prices rose higher, above the 81-dollar level … supported by cold weather conditions in the US and amid news that Russia has cut oil supplies to Belarus," said Sucden analyst Myrto Sokou.

"Russia, the world's biggest crude oil and natural gas producer, has stopped its oil supplies to Belarus after failing to agree new financial terms for 2010.

"The Russian supply issue seems to be an alert for European countries, with both Germany and Poland keeping an eye on the situation, following a similar situation in 2007," Sokou said.

Prices have risen on concerns over the implications of Russia's move to cut oil supplies to Belarus, which has been effective since New Year's Eve.

However, a spokeswoman in Belarus denied on Monday reports that Russia had cut crude supplies from January 1.

"The information on cutting supplies does not correspond to reality. Oil is arriving both for transit and for refineries," a spokeswoman for oil processor Belneftekhim told AFP.

Both of Belarus's oil refineries are working normally and Russian oil is arriving on schedule, the spokeswoman, Marina Kostyuchenko, said.

In a conflicting report, a Belarus oil industry source told the Interfax news agency that neither refinery was receiving Russian oil on Monday morning.

Media reports said Russia had stopped supplies to Belarus from December 31, with ongoing negotiations to restart deliveries hampered by tariff disagreements.

Oil also spiked higher on concerns that freezing winter temperatures in the northern hemisphere — particularly in the United States — will push up demand for heating fuel.

"Short term direction stems from colder weather in the United States which is supporting demand for winter heating fuels," said analysts at the John Hall Associates consultancy.

"The cold snap is expected to continue for some time yet," they said in a note to clients.

Cold weather also gripped Asia on Monday, with planes grounded and thousands of schools closed as the heaviest snow in over six decades blanketed Beijing and Seoul.

The oil market was also driven by strong economic data from Britain, China, Germany and the eurozone.

"In economic news, manufacturing figures from China, Germany, eurozone and UK came up much better than expected this morning, suggesting decent economic improvement," said Sucden's Myrto Sokou.

Manufacturing in China continued to expand in December as new orders received by factories rose for the ninth month in a row on booming demand from home and abroad, a survey showed Monday.

China is the world's second-largest energy consuming nation after the United States.

The HSBC China Manufacturing PMI, or purchasing managers' index, rose to 56.1 in December from 55.7 in November. A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.

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