Oil ticked up above $38 on Tuesday as investors took a fresh look at OPEC's greater than expected success in cutting supplies.
Prices had tumbled earlier following Monday's fall in U.S. stocks to a 12-year low.
The plunge on the Wall Street on Monday overshadowed figures from Petrologistics that OPEC producers were likely to pump less oil in February than January.
A Reuters calculation based on the consultant's figure showed that OPEC has delivered on 89 percent of the agreed supply cutbacks promised since last year.
The OPEC compliance was bigger than expected, said Oliver Jakob with Petromatrix. Yesterday it was overlooked because of the meltdown on the Wall Street.
U.S. crude oil futures was trading 1 cent higher at $38.45 a barrel by 7:09 a.m. EST after falling to as low as $37.65.
London Brent crude was 44 cent up at $41.49.
Some market participants expect OPEC, the source of more than a third of global oil supply, will decide on another supply cut at a meeting in March as demand falls. Oil prices are down by $110 from their peaks in July.
Several OPEC members have already suggested the producer group would decide to cut supply again.
Some analysts said, however, oil prices might get dragged down by the global economic recession.
The global financial crisis is still at hand, making oil prices drift lower along with other commodities, said Victor Say, an analyst at Informa Global Markets.
The economic data is not at all rosy, and if nothing comes out of the U.S. on plans to rescue the banks in the next couple of days, oil prices will go down, probably even below $36.
Later on Tuesday, global markets will closely watch Federal Chairman Ben Bernanke's policy report to the U.S. Congress on new bank rescue programs and President Barack Obama's 2010 fiscal year budget proposal to a joint session of Congress.
Oil traders are eyeing U.S. oil inventory data on Wednesday, which is likely to show a 1.9 million barrel increase in crude stocks last week, a preliminary Reuters poll showed.
(Reporting by Angela Moon in Seoul and Ikuko Kao in London; editing by Peter Blackburn)