The U.S. oil price firmed slightly toward $59 on Friday as global stock markets rose, although weak demand capped oil's gains.
U.S. crude for June delivery rose 18 cents to $58.80 a barrel at 4:55 a.m., but London Brent for July delivery fell 4 cents to $58.55 in its first session of trade as the new front-month contract.
World equities rose on Friday yet still looked set to end the week down for the first time in 10 weeks.
Oil prices have been following equities markets in recent months as traders look to stocks for signs of an economic recovery that could lift ailing world fuel demand.
The stock markets are a bit stronger today which is supportive but the price seems to be capped below $60, Sucden trader Rob Montefusco said. All the oil data out this week has been pretty bearish, weak demand figures from IEA, weak calls from OPEC themselves, Montefusco added.
U.S. oil hit a six-month high above $60 a barrel on Tuesday, before weak demand outlooks helped to halt the recent rally.
The International Energy Agency said on Thursday that world oil demand this year will post the sharpest annual decline since 1981 as the economy struggles to bounce back.
Demand will contract by 2.56 million barrels per day (bpd) in 2009, the IEA, which advises 28 industrialized countries, said in a monthly report. This came a day after the Organization of the Petroleum Exporting Countries (OPEC) said global oil demand would drop 1.57 million bpd in 2009 to average 84.03 million bpd.
Despite falling demand for oil, OPEC, which has announced 4.2 million bpd of production cuts since September in a bid to tighten the market, also pumped more oil last month than in March, the IEA said.
OPEC members' compliance with production quotas fell to 78 percent in April from 83 percent a month earlier. The group meets on May 28 in Vienna to set supply policy.
Traders will take cues from more economic indicators out of the United States due later in the day, including April consumer price index, the Reuters/University of Michigan survey of May consumer sentiment and ECRI weekly index of economic activity
Nigerian militants have hijacked two cargo ships in the Niger Delta and given oil companies until Saturday to evacuate staff, warning they would attack helicopters and planes after the deadline, after heavy clashes with the military.
(Editing by Keiron Henderson)