Oil rose on Thursday, after diving 12 percent overnight, but demand concerns pushed metals lower and investors will look to key U.S. non-farm payrolls data on Friday for further guidance on the macroeconomic outlook.
U.S. crude for February delivery dropped 12.3 percent to $42.63 overnight, its biggest one-day percentage loss since Sept. 24, 2001, partly due to higher than expected U.S. crude stocks data that hardened evidence of weakening demand.
But at 1203 GMT it was up 77 cents at $43.40 a barrel.
The market waited for weekly U.S. jobless claims due later in the day, and December non-farm payroll and unemployment data on Friday, expected to be dismal, for clues on future demand.
London Brent crude was up 124 cents at $47.10.
U.S. Energy Information Administration (EIA) data showed crude stocks up 6.7 million barrels, more than seven times the 900,000-barrel increase analysts expected. "(Wednesday's) data reinforced our opinion that the weak global oil demand argument is still very much alive and well," Jim Ritterbusch, president of Ritterbusch & Associates, wrote in a commentary.
Metals markets faltered, with nickel down more than 5 percent, as worries about the global economy intensified ahead of U.S. jobs data and on profit-taking as commodity indices rebalancing started.
Buying earlier this week ahead of re-weighting the Dow Jones AIG Index and S&P GSCI turned to selling as the S&P rejig started and the market focussed on weak economic data.
"Nickel is particularly volatile," analyst Leon Westgate at Standard Bank said. "It looks like another bumpy ride particularly while the index re-balancing is taking place and the added uncertainty it brings."
London Metal Exchange nickel dipped to $11,650 a tonne in early trade, down 5.3 percent or $650 and off a two-month high of $13,550 hit earlier this week.
By 1205 GMT it traded at $11,900.
Three-month copper fell 3.9 percent to $3,210 a tonne as rising LME stocks and news of smelter cutbacks in South Korea did little to help prices.
On Wednesday, prices surged as much as 5.3 percent to a one-month high of $3,570 a tonne, up 16 percent so far this year.
LS-Nikko Copper, one of the world's largest copper smelters, will cut cathode output by about 10 percent. Sluggish demand in a slowing world economy has resulted in cutbacks of all metals.
Gold steadied above $840 an ounce as oil prices stabilised while the main external driver of gold, the dollar, firmed a touch against the euro ahead of an expected interest rate cut from the European Central Bank next week.
"At the beginning of the year people are trying to get into position, so many things surrounding the market are influencing gold at the moment," Afshin Nabavi, head of trading at Geneva's MKS Finance, said. "People are looking for direction."
The euro softened after euro zone economic data came in weaker than expected. Sentiment figures fell by more than expected in December, while unemployment rose as expected.
Spot gold was quoted at $841.45/843.45 an ounce at 1206 GMT, against $842.20 an ounce in New York late on Wednesday.
The "worse-than-expected statistics should weigh on industrial metals' investment sentiment, including platinum group metals and perhaps silver, and possibly also propel the greenback higher against the euro," Standard Bank analyst Manqoba Madinane said.
The firmer dollar and the reweighting of major commodity indexes pushed sugar lower.
March raw sugar on ICE fell 0.06 cent to 11.92 cents per lb.
Coffee resumed its upward trend after Wednesday's bout of profit-taking with March arabica futures on ICE up 1.1 cents at $1.1530 per lb by 1211 GMT.
