Abundant global oil supplies coupled with a gloomy economic outlook from Europe to China had pushed Brent to its lowest since 2010 last week, consolidating a loss of more than 25% since June.
Prices recovered late last week as some investors covered short positions and Brent had risen another 8 cents to $86.24 early Monday.
On Friday the price had risen 2%, its biggest gain in more than a month. US crude gained 38 cents to $83.13 a barrel.
“Oil markets are following the positive sentiment from equity markets,” said Ric Spooner, chief analyst at CMC Markets in Sydney.
“But it is a short-term reaction and the upside is limited as, barring any geopolitical risks, nothing much has changed in terms of fundamentals.”
The International Energy Agency cut its demand growth forecast for oil in 2015 as the global economic outlook remains weak, indicating lower oil demand.
Investors’ hopes that Opec producers would cut output to support prices amid an unrelenting shale oil boom in North America have been dashed by comments and signals from Saudi Arabia, Kuwait and Iran.
However, production has been halted temporarily at the Saudi-Kuwait Khafji oilfield, which has a production of 280,000-300,000 barrels per day, just over 2% of Saudi Arabia’s total output capacity.
“I don’t think it will have a huge impact by changing any overall supply-demand balance, which is still a weak outlook,” Spooner said.
“But it does get people talking about Saudi and Kuwait – about not being unhappy to take some barrels off.”
Still, investors are keeping an eye on any disruption to oil supply from geopolitical developments. “The market is at a level where it is vulnerable to anything that is of a real threat to production,” Spooner said.
Elsewhere in the Middle East, tension mounted as Islamic State’s fight against Kurdish defenders further destabilised the Syrian border town of Kobani.
Traders are also concerned about the uncertainty over who is in charge of Libya’s vast oil reserves, after a self-styled government controlling Tripoli announced its oil policies.
Libya is currently producing 800,000 bpd of oil, down more than 40% from its peak of 1.4 million bpd in mid-2013.