Oil rose toward $76 on Thursday, boosted by a rally in equity markets in Asia and Europe on expectations of strong economic growth in China and Germany.
Shares in Hong Kong and Shanghai climbed, with resources companies outperforming the broader market as news of mega-mergers also whetted risk appetite in the sector.
European shares rose after Germany's central bank upgraded its forecast for this year's economic growth.
We have recently seen a strong correlation between equities and oil prices, and I don't think this connection will break down in the coming days, said Andy Sommer of energy trading firm EGL in Switzerland.
Commenting on oil prices' short-term outlook, he said, I think we are still in a sideways trend. As long as we don't see inventories start to come down, we will stay within a range of $80 or $85 at the upper end, and $75 at the lower end.
U.S. September crude climbed 31 cents to $75.73 a barrel at 1110 GMT. ICE front-month Brent rose 37 cents to $76.64.
Analysts downplayed the effect on oil prices of deepening tensions between Iran and the United States. Ayatollah Ali Khamenei, the country's supreme leader, said on Wednesday that Iran would not talk with the U.S. in the current climate.
Until we see anything of added importance (concerning Iran), markets are dominated still by economic recovery and those sorts of problems, said James Hughes, market strategist at CMC Markets in London.
With it being such a prolonged issue, the market does become a bit desensitized to the whole situation, he added.
The U.S. benchmark has recovered after touching a six-week low at $73.83 on Wednesday, when the Department of Energy said total U.S. petroleum stockpiles last week had soared to the highest in at least 20 years on a weekly basis.
Prices then tracked Wall Street higher on an upbeat forecast from U.S. retailer Target (TGT.N).
Oil might take its next cue from Thursday's weekly U.S. jobless claims report as the market seeks evidence of the pace of economic recovery.
Initial claims for jobless benefits for the week ended August 14 are expected to have fallen to 476,000 from 484,000 the previous week, according to analysts polled by Reuters. While unemployment is still high, a reduction in the level of claims would at least be a hopeful step that high joblessness may be in retreat.
These kinds of economic statistics can always have a big influence on sentiment, because the U.S. is still the biggest oil consumer in the world, Sommer said.
U.S. commercial crude and product inventories rose last week to the highest level since the government began tracking weekly data in 1990, the statistics published on Wednesday showed. Analysts took this as a sign that fuel supply is outpacing demand because U.S. economic recovery is slow.
In aggregate, total commercial crude and product stocks rose to 1.130 billion barrels in the week to August 13, according to a weekly report from the Energy Information Administration, above the previous weekly record high of 1.127 billion barrels set in September 1990.
(Additional reporting by Alejandro Barbajosa; Editing by Anthony Barker and Jane Baird)