U.S. oil futures rose toward $35 a barrel on Friday, snapping a five-day losing streak, after news that the U.S. government was working on a mortgage plan for troubled homeowners helped lift sentiment.
U.S. crude for March delivery rose 80 cents, or 2.3 percent, to $34.78 a barrel by 0943 GMT, after falling $1.96 in the previous session to settle at $33.98 a barrel, the lowest since December 19.
London Brent crude for the new front-month of April climbed 31 cents to $46.34 a barrel.
The Brent March contract expired on Thursday at $44.65, extending its premium to U.S. crude to more than $10, due to a glut at the main U.S. storage hub in Oklahoma and Nigerian supply problems that tend to have a bigger impact on European supplies.
But the Brent premium for the April contract was less than $4, and some analysts expect inventories to ease eventually at Cushing, Oklahoma, the delivery point for the U.S. futures contract, based on West Texas Intermediate (WTI) crude.
"We expect the energy markets to send mixed signals over the weeks ahead," MF Global said in its daily commentary on Friday.
"March WTI should be under continued pressure, as it approaches expiration on the 20th, this similar to weakness experienced by both the December and January contracts before it. Brent, on the other hand, should remain firm as OPEC cuts take hold, while participants also keep a wary eye on developments in Nigeria."
U.S. JOBLESS
U.S. oil prices have lost about 14 percent this week and are languishing at a three-week low, pressured by persistent demand worries and doubts over the efficacy of the U.S. government's banks rescue plan.
Oil's losses on Thursday were exacerbated by news that the number of people staying on unemployment benefits in the United States rose by 11,000 to a record of 4.810 million in the last week of January.
In the short term, analysts believe the market's direction would be influenced by movements in stock markets.
News that the Obama administration was working on a program to subsidize mortgage payments for troubled homeowners renewed hopes the host of measures could pull the world's largest economy out of its steep tailspin, sparking a late U.S. stocks rally.
European stocks opened higher on Friday .EU, while Asian stocks excluding Japan .MIAPJ0000PUS rose 2.2 percent and the Nikkei .N225 climbed 1 percent.
Algerian Oil Minister Chakib Khelil told Reuters on Thursday that there was a 50 percent chance OPEC could agree to deepen cuts when it meets in March, and that compliance among members was solid.
"We have 85 percent which is unusual for compliance. By meeting time, we will probably have 100 percent," Khelil said.
