Oil edged higher above $72 a barrel on Monday, rebounding from a 3-week low, but gains were capped by lingering concerns over slowing global economies and future demand for fuel.
U.S. crude for August climbed as much as 56 cents to $72.70 a barrel on Monday and was up 27 cents at $72.41 by 4:50 a.m. ET.
The New York Mercantile Exchange (NYMEX) will combine Monday's and Tuesday's trading sessions because of the U.S. Independence Day holiday, with a single settlement price on July 6.
ICE Brent crude for August rose 46 cents to $72.11.
We seem to have found a bottom in the low $70s in what should be a quiet day's trade, said Carsten Fritsch, oil analyst at Frankfurt-based Commerzbank.
Where oil moves next very much depends on equity market sentiment and the economic outlook and as long as economic pessimism persists oil should hold at the lower end of the $70-$80 range.
Asia's stock markets were mixed, while European shares were largely unchanged in a trading session where volumes were expected to be thin on equity and oil markets because of the U.S. holiday.
Oil prices fell every day last week for a cumulative decline of 8.5 percent, the steepest weekly drop since early May.
Barclays Capital, a bank which has long predicted higher oil prices, lowered its crude price forecasts for this year and next due to persistent weak economic indicators, although its forecasts remain well above current prices.
U.S. crude touched $71.62 on Friday, the lowest intraday level since June 8, after a report showing a larger-than-expected drop in U.S. nonfarm payrolls for June of 125,000.
The dollar and U.S. equities also fell after the weak U.S. jobs report rekindled doubts about the strength of recovery, yet failed to confirm widespread fears the economy was dipping back into recession.
A weather system located between Jamaica and Honduras in the Caribbean Sea had a 30 percent chance of developing over the next two days into a tropical cyclone, a category that includes tropical storms and hurricanes, the U.S. National Hurricane Center said late on Sunday.
The system's location and expected course are similar to those that Hurricane Alex followed during its formation stage in late June, before moving into the Gulf of Mexico, forcing Mexican oil terminals to shut down and U.S. producers to curb output.
Gulf of Mexico oil operations continued to restart on Friday after being shut as a precaution before Hurricane Alex hit Mexico last week.
Money managers cut net long crude oil positions on the New York Mercantile Exchange in the week through Tuesday, the Commodity Futures Trading Commission said on Friday, reducing bets that prices will rise.
Open interest positions remained bulked at August crude oil $70 and $65 put options on Friday, an indication that traders are betting prices will fall toward those levels.
(Editing by Keiron Henderson)