Oil halted a three-day slide to rise above $96 a barrel on Tuesday on expectations of a continuing drop in crude stocks in top consumer the United States and signs OPEC will not raise output.
The prospect of rising tensions in Africa's top exporter Nigeria provided further support.
Armed groups in Nigeria's oil producing south are building up arms and supplies for a major attack on an oil facility in the world's eighth-largest exporter, militant and security sources said on Tuesday.
U.S. oil rose $1.55 to $96.63 a barrel by 8:15 a.m EST, recouping some of Monday's three percent or $2.82 drop. London Brent crude rose $1.34 to $95.73.
Oil has fallen since prices crossed the $100 mark for the first time last week, weighed down by fears of a recession in the U.S. and more recently by forecasts of warmer weather in U.S. Northeast, the nation's biggest heating oil market.
Offsetting this potentially bearish development is the current very low levels of U.S. inventories which will likely prevent prices from sliding too far, analysts at Barclays Capital said in a research note.
U.S. crude oil stocks were expected to have dipped by 900,000 barrels last week, an eighth consecutive draw, pulling them even further below 300 million barrels, a Reuters poll of analysts ahead of Wednesday's data found.
The poll also showed a likely 300,000-barrel gain in distillate supplies, and a 2.1 million-barrel gasoline build.
Oil received some support after an OPEC delegate told Reuters the exporter group was unlikely to change oil output policy at its upcoming meeting on February 1 if prices stayed close to their current level.
If the price stays at this level, I don't think they will do anything, the delegate said. Ministers will be looking at the second quarter when demand declines seasonally.
Oil took a knock after a U.S. report last week showed the nation's unemployment rate rose to 5 percent in December, its highest in more than two years.
The biggest concern in the market now is the possibility of a recession in the U.S., said Tony Nunan, a manager at Mitsubishi Corp's risk management unit.
Right now, there seems to be a 50-50 chance that it would happen and even if it doesn't, the fear that it might is enough to spook the market.
(Additional reporting by Yaw Yan Chong in Singapore and Peg Mackey in London; editing by James Jukwey)