Oil rose above $75, gaining for the second day on Tuesday, on prospects that demand will increase due to strong economic data from China and the United States, the world's top two energy consumers.
But price gains were capped because current fuel demand remains weak in many developed countries.
U.S. crude oil futures were trading 76 cents higher at $75.19 a barrel by 1505 GMT. ICE Brent rose 86 cents to $73.97.
The market seems to be recovering, buoyed by more positive economic data and the implications that has for demand, Christopher Bellew, a broker with Bache Commodities, said.
On Monday, strong manufacturing data from the United States pushed up oil by more than $1.50. Prices fell over 8 percent in January.
The Institute for Supply Management (ISM) index rose to its highest since August 2004, a sign the world's top economy is recovering from the deepest recession in decades, which could boost oil demand.
That followed a separate report from the government last week that the U.S. economy expanded by 5.7 percent in the fourth quarter, the quickest pace in more than six years.
China's appetite for foreign oil will stay near record levels in coming months due to a recovering economy, rising refining and stockpiling capacity, the official Xinhua news agency said.
The dollar dipped against the euro around mid-day, supporting oil prices.
The market focus will shift to two sets of weekly U.S. oil statistics due out later on Tuesday from an industry group and on Wednesday from the government.
Analysts in a Reuters poll expect the data to show falls in crude and middle distillate inventories, including heating oil, and an increase in gasoline stocks.
But even though U.S. oil data is forecast to show weekly drops, the absolute inventory volumes of refined products are likely to remain much above year-earlier levels.
Immediate fuel demand remains weak. Tony Hayward, the chief executive of oil major BP
Just this week, oil refiners Japan's Cosmo Oil <5007.T> and U.S. Sunoco Inc
Russia maintained its oil output above 10 million barrels per day in January, outpacing Saudi Arabia.
(Additional reporting by Alejandro Barbajosa; editing by Sue Thomas)