West Texas Intermediate futures for February delivery climbed to $36.15 (+0.95%), while Brent crude advanced to $36.64 (+0.80%) on speculation that cold weather will support prices as many countries entered the peak-demand heating season. However many regions see a relatively mild winter and ample supplies continue weighing on markets. According to BNP Paribas the number of heating days in the U.S. and Europe had been 30% and 39% below the 10-year average since December 7, respectively.

Fundamentals driven by the supply glut remain unfavorable. That's why many analysts say these gains will not be sustained.

Gold steadied at $1,077.40 (-0.30%) after two days of gains, which were generated by a relative weakness in the U.S. dollar. Nevertheless bullion's upward potential is limited due to concerns that higher interest rates in the U.S. will hit demand for the non-interest-paying precious metal. The Federal Reserve is likely to raise rates further in 2016.

Oil prices hit multi-year lows on Monday undermining gold's strength as the precious metal is often viewed as a hedge against oil-led inflation.