Oil prices have risen more than one per cent in a session of volatile trade, drawing support from signs that Saudi Arabia is cutting crude output but pressured by concerns that slowing global economic growth could dent demand.
Brent crude futures gained $US1.04 overnight to settle at $US55.95 a barrel, a 1.89 per cent gain.
US West Texas Intermediate crude futures rose 55 cents to settle at $US47.09 a barrel, a 1.18 per cent gain.
Prices traded in a wide range, with Brent hitting a session high of $US56.30 a barrel and a low of $US53.93 a barrel.
WTI posted a session high of $US47.49 a barrel and a low of $US45.35 a barrel.
Supporting futures were signs of reduced supply from members of the Organisation of the Petroleum Exporting Countries.
OPEC oil supply fell in December by the largest amount in almost two years, a Reuters survey found, as top exporter Saudi Arabia made an early start to a supply-limiting accord while Iran and Libya posted involuntary declines.
OPEC led by Saudi Arabia, alongside allied producers led by Russia, agreed last year to rein in supplies starting from January after oil prices tumbled from above $US86 on worries about surging output.
‘The Saudis are still spearheading a significant production cut that became official this week,’ Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
‘Thus far, strong adherence to adjusted quotas appears a high probability.’
But oil price gains were capped by concerns about a faltering global economy.
Tech giant Apple cut its sales forecast, citing a slowdown in China.
The news rattled US equity markets and weighed on oil prices, which at times track Wall Street.
Weaker-than-expected US factory data also added to economic worries.
‘Oil is flip-flopping on concerns of supply and demand,’ said Phil Flynn, an analyst at Price Futures Group in Chicago.
‘It’s really a battle between the supply situation, which looks to be tightening, versus the possibility that demand will drop off.’
US oil and gas executives’ outlook turned negative for the first time since the low point of the last oil bust, according to results of a survey released on Thursday by the Federal Reserve Bank of Dallas.
Investors have been concerned about rising supply from top producers, including the United States and Russia.
Riyadh was expected to cut February prices for heavier crude grades sold to Asia due to weaker fuel oil margins while reducing prices for light grades to keep Saudi oil competitive against rising US shale oil supplies, a Reuters survey showed on Thursday.