US crude stocks fell more than expected last week as refineries hiked output, data from the Energy Information Administration showed on Wednesday.
Brent added $0.45 to $70.37 per barrel by Thursday morning. The contract settled below $70 on Wednesday after a report suggested Saudi Arabia expected still lower prices for oil.
US crude futures rose $0.34 to $67.72 per barrel, after a 50-cent gain in the previous session.
Analysts expect prices to head lower despite recent steep falls as US shale oil production growth stays strong while OPEC has decided not to cut supply, preferring to protect market share.
Markets could be going through a temporary reprieve after “bearish exhaustion”, The Schork Report editor Stephen Schork told Reuters.
“By most estimates, the economics on oil production are below breakeven,” Schork said, referring to North American capital expenditure and fiscal budgets of OPEC countries.
However, he said it was too early to say how low oil prices could fall. Brent’s failure to break resistance at $71.42 could encourage new selling, Schork said.
Investors are turning their focus to US data for clues on the strength of demand in the world’s largest economy and oil consumer. Economic resilience in the US has supported global stocks with the Dow and S&P scoring record highs overnight.
In the United States, crude inventories fell by 3.7 million barrels in the last week, compared with analysts’ expectations for an increase of 1.3 million barrels.