New York's main futures contract, light sweet crude for August, lifted 2.33 dollars from its closing price on Friday to end at 71.49 dollars.

London's Brent North Sea crude for delivery in August gained 2.07 dollars to 70.99 dollars a barrel.

"Reports of another Nigeria attack seems to give the market a boost, as well as a report that China is going to add to its strategic petroleum reserves," said Phil Flynn of Alaron Trading.

Nigerian rebels on Monday announced their latest raid against a Shell oil facility and said they had killed at least 20 soldiers in a gun battle, a claim denied by the security forces.

While a Shell spokesman confirmed the raid and said it had caused a loss of production, Nigeria's combined police and army joint task force (JTF) denied there had been any clash with the rebels.

The Movement for the Emancipation of the Niger Delta (MEND) militants said the Shell Forcados off-shore platform in Delta state was burning "after a massive explosion" following their 2:30 am (0330 GMT) raid.

The MEND statement also said they had sunk a gunboat with between 20 and 23 soldiers on board.

Reports over the weekend that China planned to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years also boosted prices, Flynn said.

"If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support," he said.

But the market for oil and other commodities will continue to be haunted by the global economic downturn, analysts said.

"The natural resource rally, underway since the beginning of the year, seems to be losing momentum," said Mike Fitzpatrick of MF Global.

The International Energy Agency (IEA) on Monday slashed its mid-term estimate for world oil demand, which it said may rise by an average 0.6 percent a year in 2008-2014, down sharply from its forecast of 1.6 percent growth made last year.

"Consumers will probably be unable to carry the US out of recession, as they have in the recent past, and Brazil, Russia, India and China, the so-called BRIC nations will not be able to do it alone either," Fitzpatrick said.

"Those economies are not strong or diverse enough and too dependant on exports. The natural resource rally, underway since the beginning of the year, seems to be losing momentum," he said.

But economic data Monday remained encouraging.

Japan's industrial output rose for a third month running, matching the fastest pace in 56 years, as the world's number two economy clawed back from its worst recession on record.

In addition, the European Commssion's economic sentiment indicator for the 16-nation eurozone rose to 73.3 points in June from 70.2 points, climbing further away from a record low 64.6 points reached in March.

Crude oil futures plunged from record high points of more than 147 dollars in July 2008 to about 32 dollars in December as the economic downturn ravaged energy demand but the market has since clawed back ground on recovery hopes.

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