Oil rallied toward $36 a barrel on Thursday ahead of key United States inventory data, while the dollar's weakness and a recovery in global stock markets offered support to oil prices.
Crude stockpiles in the United States likely rose last week by 3.0 million barrels to their highest since May 1998, a Reuters poll of analysts ahead of the U.S. Energy Information Administration (EIA) data due later on Thursday showed.
A day ahead of expiry, U.S. crude futures for March delivery rose $1.15 cents to $35.77 a barrel by 7:37 a.m. EST, while April delivery contracts rose $1.18 cents to $38.59.
London Brent for April delivery rose $1.13 cents to $40.68.
A bit of wait and see ahead of the data today, some people might have looked at API figures as a positive, said Rob Montefusco, a trader at Sucden Financial.
Montefusco added: I think there is support from a bit of dollar weakness and decent stock market performance.
The American Petroleum Institute (API) said on Wednesday crude stocks rose last week by 1.6 million barrels, less than expected. However, the EIA report is widely regarded as more accurate than the API's because U.S. energy firms are required to participate.
Oil stocks in the U.S. have risen by 20 percent since September as the downturn has crushed consumption, and helped pull crude prices more than $110 off their peaks last summer.
World stocks rose from the previous day's three-month low on Thursday as some European corporate quarterly results were better than the most pessimistic expectations, while the dollar fell, adding support to oil prices.
Michel Contie, a senior vice-president at Total, said at International Petroleum in London on Thursday he thought oil prices would recover going forward.
We don't see a reason for long lasting depressed oil prices because this doesn't fit with long term oil consumption forecasts, Contie said
However, the global economy still continues to look dire. Japan is likely to see bleak GDP growth in the first half of the year, Bank of Japan Governor Masaaki Shirakawa said on Thursday, adding the outlook for the world's number two economy was highly uncertain.
In the United States, with employment, housing and credit conditions showing no signs of a turnaround, the U.S. central bank forecast the world's top economy would shrink by between 0.5 percent and 1.3 percent this year.
U.S. President Barack Obama pledged up to $275 billion on Wednesday to help stem a wave of home foreclosures, part of a broad effort using massive sums of government money to lift the country out of recession.
(Additional reporting by Daniel Fineren; Editing by James Jukwey)