Benchmark crude rose $1.66 on Tuesday to end at $101.34 per barrel in New York.

Brent crude rose $1.31 to finish at $109.27 per barrel in London.

Prices have risen in the past week as encouraging U.S. economic news pointed to stronger future demand. The New York-based Conference Board said its Consumer Confidence Index jumped almost 10 points from November, to 64.5. That level hasn't been seen since April and was near a post-recession peak.

Higher confidence is in line with retail reports of a decent holiday shopping season. Retailers saw a surge of shopping the week before Christmas, and the National Retail Federation now expects a 3.8 percent increase in holiday sales, up from its a forecast of 2.8 percent in September.

Consumer spending accounts for about 70 percent of the U.S. economy, so more spending could boost growth and demand for oil. Consumers have cut back in recent years because of uncertainty about the economy, fed by a weak jobs market and a stagnant housing sector. Gasoline demand has been steadily declining since spring.

Tensions in the Middle East also boosted oil prices. Iran has threatened to block oil shipments through the Strait of Hormuz, one of the busiest routes for crude shipments, if the West tries to embargo Iran's oil exports. The Iranian navy currently is conducting exercises in the region. About a third of the world's oil passes through the narrow strait. The U.S., The U.K. and other nations have talked about more sanctions against Iran as part of an effort to clamp down on its nuclear program.

Iran is the world's fourth largest oil producer, according to the Energy Department. Much of its oil is sold to customers in Asia. If tankers could not use the Strait of Hormuz, they would have to take longer, more expensive routes to their destinations.

In other energy trading in New York, natural gas was virtually unchanged at $3.1120 per 1,000 cubic feet. Heating oil rose 2 cents to finish at $2.9085 a gallon, and gasoline futures were flat at $2.6888 a gallon.