U.S. crude oil futures settled at their highest level in 27 months on Monday on fears that the civil unrest in Egypt could widen to other Middle East countries and disrupt oil shipments from the region.

An international oil tanker passes through the Suez canal in Ismailia, Egypt.

In London, Brent oil prices jumped above $101 a barrel for the first time since 2008. Analysts and brokers had expected Brent's move over $100 to help U.S. crude push above $92.58, the previous 2011 peak from Jan. 3.

U.S. light, sweet crude [CLH1  92.03    -0.16  (-0.17%)   ] for March delivery delivery rose $2.85, or 3.19 percent, to settle at $92.19 a barrel, reaching $92.84 intraday, both the highest since October 2008.

Brent crude for March [LCOC1  100.72    1.30  (+1.31%)   ] rose $1.59 to settle at $101.01 a barrel and reached $101.73 intraday, the highest since prices touched $103.29 on Sept. 29, 2008.

Egyptian President Hosni Mubarak overhauled his government in an attempt to defuse a popular uprising but protesters rejected the changes and said he must surrender power. The Suez Canal continued to operate normally.

Brokers and analysts also pointed to a recently improving economic outlook and demand growth already providing bullish momentum for oil prices, along with heating fuel demand boosted by severe cold snaps during the Northern Hemisphere winter.

Monday saw more supportive economic data from the United States in the form of better Midwest factory activity and firmer consumer spending.

The OPEC oil producers group has refrained from announcing any output boost, despite consumer countries' trepidation about the threat posed by elevated oil prices to economic recovery.

"Momentum is up. Traders are buying dips on fears that things could escalate further in the Middle East and spread to other countries," said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.

Oil prices were choppy earlier, with traders reassessing Friday's price surge after fears about contagion failed to materialize at the weekend.

The U.S. price strength narrowed the benchmark West Texas Intermediate crude's discount to Brent to less than $9 a barrel after the spread widened to a near record above $12 a barrel last week.

Dwindling North Sea production and high U.S. crude inventories, especially at the Cushing, Oklahoma, WTI delivery point, have been factors seen as causing the spread to widen, along with investors' attraction to the bullish momentum.

Egypt is not a major oil producer but protests and demands for political change there come two weeks after Tunisia's president was overthrown and investors worry that oil-producing states in the region may face similar protests.

Egypt controls the Suez Canal and the Suez-Mediterranean (SUMED) Pipeline, which together moved over 2 million barrels per day (bpd) of crude and oil products in 2009. Shipping has so far proceeded as normal through the 192-km (120-mile) Suez Canal shipping choke point but port operations have been slowed by the protests.

OPEC Secretary General Abdullah al-Badri said the producer group would boost oil supply in the event of a real shortage, but did not expect unrest in Egypt to affect the Suez Canal or SUMED pipeline oil flows.

OPEC ministers will discuss oil output policy on the sidelines of a conference in Saudi Arabia next month, an OPEC delegate told Reuters.

Ministers are scheduled to meet on Feb. 22 in Riyadh with counterparts from oil-consuming nations and the International Energy Agency gathering at the International Energy Forum.

But Saudi Oil Minister Ali al-Naimi told an industry conference that the price spike had more to do with the value of the dollar and the behavior of oil traders.

The dollar weakened against a basket of currencies, with the dollar index[.DXY  77.58    -0.155  (-0.2%)   ] dropping 0.41 percent as euro zone inflation topped forecasts, supporting the view that interest rates in the region could rise before those in the United States.