Tropical Storm Edouard lies about 90 miles (145 kilometers) southeast of the Mississippi River mouth and may strengthen to a hurricane as it heads west toward Texas, the National Hurricane Center said. Oil rose from an 11-week low last week as U.S. fuel stockpiles fell and Iran ignored a deadline in its dispute with the United Nations over its nuclear research.
Crude oil for September delivery rose as much as $1.21, or 1 percent, to $126.31 a barrel in after-hours electronic trading on the New York Mercantile Exchange and traded at $125.93 at 9:15 a.m. in Singapore.
The contract gained 0.8 percent on Aug. 1 on speculation the odds of a military strike against nuclear research facilities in Iran, the world's fourth-largest oil producer, were increasing.
Iran didn't respond by an Aug. 2 deadline to an offer from the U.S., Russia, China, France, the U.K. and Germany of economic and diplomatic incentives in exchange for the suspension of its uranium-enrichment program.
Brent crude oil for September settlement climbed as much as $1.12, or 0.9 percent, to $125.30 a barrel on London's ICE Futures Europe exchange, and traded at $125 at 9:09 a.m. in Singapore.
Hedge fund managers and other large speculators last week reduced their bets on falling prices, according to Commodity Futures Trading Commission data.
Net-short positions, the difference between orders to buy and sell the commodity, fell to 660 contracts at July 29, 82 percent less than a week earlier.