Brent crude rose towards $105 per barrel on Monday as plans to stimulate Japan's economy lifted financial markets, but the oil benchmark remained near an eight-month low on worries over global economic growth and fuel demand.
The Bank of Japan (BoJ) has promised to inject $1.4 trillion into the economy in less than two years and economists expect the huge monetary stimulus to support assets such as oil and other commodities.
But deepening recession in parts of Europe, tepid expansion in the United States and slower-than-expected growth in emerging economies have all curbed oil consumption this year, helping fill oil inventories and keeping a lid on prices.
Brent futures for May rose $1.05 per barrel to a high of $105.17 on Monday, before easing back to trade around $104.90 by 12.20pm UAE time. US light crude oil was up 60 cents at $93.30 after logging its biggest weekly loss in more than six months.
Brent hit an eight-month low of $103.62 per barrel on Friday after disappointing U.S. jobs data and traders said the downtrend could resume again once the market had consolidated.
"Oil has more risks to the downside as long as the outlook for global demand remains pessimistic," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
"This looks like a slight rally after the recent drop. There is little scope for a major price recovery."
Oil prices are expected to trade in a tight range this week ahead of a spate of economic data from China that will throw light on the pace of recovery in the world's second-biggest oil consumer and its monetary policy.
While an intense burst of monetary stimulus from the Bank of Japan will help support oil, weak data from top consumer the United States will keep gains in check.
American employers hired at the weakest pace in nine months in March, adding 88,000 jobs in March compared with expectations of 200,000, data showed on Friday, stoking worries about the health of the world's largest economy.
Support may emerge in coming weeks from China's economic growth data for the quarter ended March 31, which may show continuing evidence of a moderate recovery, with growth expected at 8 percent from 7.9 percent in the last quarter of 2012.
Industrial output growth is also expected to be steady while inflation may have slowed in March, increasing the likelihood that the central bank will continue to maintain a benign monetary policy, economists say.
Brent has dropped almost $15 since hitting its 2013 peak in February, reducing its premium above US crude futures to a nine-month low of around $11.50 per barrel.
Weakness in the Brent market pushed the front futures month to 9 cents below the second month, its biggest discount, or contango, since July. Brent's premium to Dubai crude oil also hit a nine-month low on Monday
Oil could draw support from supply and geopolitical worries after Iran's weekend talks with western powers ended without a resolution, prolonging a stand-off over Tehran's disputed nuclear programme.
US Secretary of State John Kerry said on Sunday world powers would pursue further talks with Iran, but stressed that the process could not go on forever.
However, Norway supply worries eased after a last minute wage agreement deal averted a strike that could have disrupted the country's oil and gas industry.