Oil hovered little changed above $56 a barrel on Monday, pausing from the previous session's near 4 percent loss, as the market awaited further economic data and movements in equities markets for directions.
U.S. crude for June delivery nudged up 5 cents to $56.39 a barrel by 11:48 p.m. EDT. 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 was up 3 cents at $56.01.
Overall, oil prices are going to track the equities market and traders will be eyeing the economic data coming out from Japan and the U.S. for direction, said Ben Westmore, a commodities analyst at the National Australia Bank.
Fresh violence from Nigeria may also lend some support to oil prices and encourage traders to re-take some of the falls seen last week.
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.
Japan will release data on its April consumer confidence index and investors will get a fresh reading on U.S. homebuilder sentiment and sales later on Monday.
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, the Energy Information Administration, 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 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 OPEC 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.
Despite a forecast by the IEA that world oil demand will post its sharpest annual decline since 1981 this year, oil prices have recovered from a low of $32.40 touched last December to hover between $50-$55 a barrel most of the month, tracking a broader rally in the equities market that was underpinned by hopes of an economic recovery.
Crude oil speculators on the New York Mercantile Exchange shifted to a small net long position in the week to May 12, according to data from the U.S. Commodity Futures Trading Commission released on Friday.
(Reporting by Fayen Wong; Editing by Clarence Fernandez)