Oil prices remained above $89 a barrel on Monday after rallying to a 26—month high last week, fueled by hopes of increased demand amid a cold snap in Europe and rising speculative interest.

By early afternoon in Europe, benchmark oil for January delivery was up 11 cents to $89.30 a barrel in electronic trading on the New York Mercantile Exchange. The contract added $1.19 to settle at $89.19 on Friday, the second time in less than a month that oil has reached the level where it was in the fall of 2008.

Prices were kept in check by a stronger dollar, which makes crude more expensive for investors holding other currencies.

Hit by the debt crisis affecting several members of the European Union, the euro fell to $1.3291 on Monday from $1.3387 late Friday in New York, while the British pound was down to $1.5679 from $1.5741.

There are widespread expectations that the price will hit $90 a barrel by year’s end and head toward $100 a barrel by next spring, when traders begin looking ahead to the summer driving season.

“There is generally rather bullish sentiment in the oil market,” said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. “The $90 level is now becoming a magnet. The bulls in the market will try to push it across $90 but the question is, can it be sustained?”

In other Nymex trading in January contracts, heating oil lost 0.7 cent to $2.4804 a gallon, gasoline added 0.14 cent to $2.3535 a gallon and natural gas gained 6 cents to $4.409 per 1,000 cubic feet.

In London, Brent crude added 19 cents to $91.61 a barrel on the ICE futures exchange.

Keywords: Oil prices