SINGAPORE: Oil rebounded from days of declines to climb towards US$107 a barrel on Friday, but gains were capped by speculation that strong US data could prompt the Federal Reserve to further taper its stimulus.
Oil markets offered a muted reaction to mixed Chinese trade data released earlier on Friday, with traders now awaiting a report on US jobs that are forecast to have risen by a solid 196,000 in December.
"We are at multi-week lows and you will get some buying at these levels regardless of the US payrolls data," said Michael Hewson, analyst at CMC Markets in London.
"Regardless of payrolls numbers this afternoon, you could see further declines. If figures are good then the expectations will start to shift to the next Fed meeting... and the potential for more tapering."
Brent crude futures were up 51 cents at US$106.90 per barrel by 0920 GMT, after settling 76 cents lower in a volatile session that saw the contract swinging by more than US$2.
The benchmark was on track to end the week flat, after falling to near two-month lows on Thursday, as investors weighed rising production in Libya with increased tension in the country and elsewhere in the region.
US oil rose by more than US$1 before paring gains to trade 79 cents up at US$92.45 per barrel at 0921 GMT. It touched an eight-month low of US$91.24 on Thursday and was on course to end lower for the second straight week.
"We're down quite a lot since late December. The lows we saw in November and June last year are acting as a barrier," Hewson said, referring to the Brent contract.
Technicals indicate that US oil may to rebound to US$93.48, while Brent may bottom around US$105.59, according to Reuters market analyst Wang Tao.
Oil prices were underpinned by data showing Chinese crude imports rose 13 per cent in December to a record 6.31 million barrels per day.
But imports by the world's No.2 consumer of oil after the United States rose by a smaller four per cent in 2013, versus a near seven per cent annual increase in 2012.
Chinese trade data for December was also a mixed bag, with exports growing a little less than expected at 4.3 per cent from a year earlier and imports outpacing forecasts with an increase of 8.3 per cent.
"The Chinese data released overnight is pulling oil up," said Commerzbank analyst Carsten Fritch.
Uncertainty over supplies have spurred volatility in oil markets in recent days. Libya more than doubled its output this week to some 650,000 bpd, but the situation remains unstable amid tension between government forces and rebels.
"Oil output from Libya is priced in and there is no chance production will be more than that for the time being because the rest of the fields are in the east," Fritch said.-- Reuters
