Still, declines in Johnson & Johnson shares helped limit some of the Dow average's gains. The drug maker, a Dow component, was sued by Guidant Corp to force the completion of a $25 billion merger of the two companies.
"A drop in oil prices is always welcome and that, combined with investors' hopes for a rally, is giving support to stocks at the start of the week," said Michael Viracola, a managing director for trading at Adams Harkness in Boston.
The Dow Jones industrial average was up 25.13 points, or 0.24 percent, at 10,556.05. The Standard & Poor's 500 Index was up just 0.14 of a point, or 0.01 percent, at 1,220.28. The technology-laced Nasdaq Composite Index was up 4.67 points, or 0.22 percent, at 2,174.10.
US light crude oil futures for December delivery fell $1.38 to $59.20 a barrel as mild weather across the northern hemisphere and recovering US production eased fears supplies could run short.
In the merger dispute, J&J said it believes it is not required to complete its acquisition of Guidant. J&J shares fell 0.3 percent to $60.69, while Guidant's stock slid 3.6 percent to $56.81 after news of the lawsuit.
Both the Dow and the Nasdaq got a lift from Microsoft Corp, up 0.5 percent at $26.80. Microsoft, the world's largest software maker, has emerged as the lead suitor for a stake in Time Warner Inc's Internet unit, America Online, or AOL, according to a report by The New York Times. Microsoft is among the 30 stocks in the blue chip Dow average, but it trades on Nasdaq.
The stock of utility company TXU Corp jumped 7 percent to $100.33 after it said it would split its stock, buy back shares and sharply boost its dividend.