Oil bounced back to $57 a barrel on Monday, recouping some of the previous session's near 4 percent loss, buoyed by short-covering despite a still uncertain outlook for the global economy.
U.S. crude for June delivery rose 59 cents to $56.93 a barrel by 0802 GMT (4:02 a.m. EDT), after climbing to $57.10. The contract fell $2.28 to settle at $56.34 a barrel on Friday, down from a six-month high of more than $60 hit earlier last week.
London Brent crude rose 60 cents to $56.58.
Prices are up on short-covering and traders are buying in after the sharp sell-off on Friday, said Tetsu Emori, a commodity fund manager at Astmax Co Ltd.
Analysts said investors would be eyeing data on U.S. homebuilder sentiment and sales later on Monday to gauge how the world's largest economy is faring.
Confidence at Japan's manufacturers edged up from record lows, a Reuters monthly poll showed, as rebounds in exports and production suggest the world's No.2 economy may have reached a trough in the first quarter.
Asian shares fell on Monday as concerns about slumping corporate profits and the still-uncertain outlook for the global economy fueled a retreat from recent highs.
Oil fell nearly 4 percent toward $56 a barrel on Friday as dealers became increasingly pessimistic about the outlook for global energy demand after three top energy forecasters -- the International Energy Agency (IEA), the Energy Information Administration (EIA), and OPEC -- recently downgraded their forecasts for global energy demand in 2009.
Losses on equities markets and moderate gains in the U.S. dollar against other currencies also encouraged selling in the commodities markets.
OPEC, which has agreed to cut 4.2 million barrels per day (bpd) of output since September, will meet on May 28 to revisit production policy.
Kuwait's oil minister told Reuters in an interview there was no need for further output cuts by the Organization of the Petroleum Exporting Countries, as he did not want to see oil prices go up too fast.
Nigerian militants said on Sunday they had blown up two oil and gas pipelines near to Escravos in the Niger Delta and that they were moving a British hostage into the area where there has been heavy recent fighting.
On Monday, the main militant group said it would blockade key waterways in the Niger Delta to try to prevent crude exports after days of military helicopter and gunboat raids on its camps.
Despite an IEA forecast that world oil demand will post its sharpest annual decline since 1981 this year, oil has recovered from a low of $32.40 touched in December to hover between $50 and $55 a barrel most of the month, tracking a broader equities market rally underpinned by hopes of an economic recovery.
On refinery news, Sunoco Inc
Analysts said the outage could lend support to U.S. gasoline prices ahead of the summer driving season, which begin next week.
(Editing by Ramthan Hussain)