Crude-oil futures climbed to another record level above 80 dollars a barrel Monday.
On the New York Mercantile Exchange, crude for October delivery rose 1.47 dollars to close at 80.57 dollars a barrel, a gain of 1. 9 percent.
Earlier, the price had climbed to an all-time high of 80.70 dollars.
Analysts said the market is gaining confidence that a Fed rate cut will be a good sign for further energy demand.
The U.S. central bank will meet on Tuesday and experts expect it to agree to cut its benchmark federal funds rate by at least a quarter percentage point to 5 percent to help markets hobbled by a credit crunch.
Oil broke over 80 dollars a barrel for the first time last week as strong global energy demand and supply disruptions raised fears of an inventory crunch leading into the high-demand winter heating season.
U.S. crude supplies are running at their lowest level in eight months while gasoline supplies in the top energy consumer were down at their lowest since Hurricane Katrina knocked out several Gulf Coast refineries in 2005.
The U.S. Department of Energy reported Wednesday that U.S. crude inventories fell by a sharper-than-expected 7.1 million barrels in the week ended Sept. 7. The drop was almost three times steeper than market expectations.
Crude-oil supplies dropped 2.03 million barrels in the week ended Sept. 14, according to the median of responses by 12 analysts surveyed by Bloomberg News before an Energy Department report this week. It would be the 10th decline in 11 weeks.
Oil was also receiving support Monday from fresh concerns over Iran's nuclear program.
France's Foreign Minister Bernard Kouchner increased pressure on Tehran on Sunday, saying France had to prepare for the prospect of war with Iran. Iran has called the comments provocative.