LONDON: Oil rose towards $111 per barrel on Tuesday, bucking a five-day losing streak after China's vow to deliver strong economic growth sparked fresh buying.
Gains were limited, however, as investors eyed a raft of medium-term concerns, including rising supplies, a fiscal crisis in the United States and the deepening downturn in the euro zone.
Brent crude futures rose 66 cents to $110.75 per barrel at 1022 GMT, while US crude added 31 cents to $90.43.
Brent tested its 2013 low in the previous session, dropping to $109.58, the lowest since Jan. 17. US crude hit its lowest since Dec. 26 at $89.33.
"I would call this move in the oil markets as bargain hunting rather than any change in the outlook," said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.
"But China is showing some signs of confidence, which has resulted in the rebound today."
China will boost fiscal spending this year to deliver economic growth at 7.5 percent, outgoing premier Wen Jiabao said on Tuesday ahead of the country's annual parliamentary meetings.
The statement countered concerns about demand in the world's No. 2 oil market after purchasing manager surveys over the weekend suggested growth in China's key manufacturing and service sectors may be slowing.
China's factory growth as well as services growth slowed to multi-month lows, two purchasing manager indexes (PMI) showed, suggesting moderating growth in the economy.
In the United States, about $85 billion of automatic spending cuts that came into effect on Friday threw a cloud of uncertainty over growth prospects in the world's largest economy.
The International Monetary Fund estimates that the cuts, if fully implemented, will shave 0.5 percentage points from the US growth rate.
Markets are now awaiting the US non-farm payrolls data due this week for further clues to the health of the US economy and the future of the Federal Reserve's monetary easing programme, analysts said.
US crude inventories may have climbed last week for a seventh straight week, according to a Reuters survey ahead of the release of weekly inventory data from the American Petroleum Institute later in the day.
Simmering tensions in the Middle East, especially between Israel and Iran over the latter's nuclear program as well as prolonged civil unrest in Syria and Egypt may underpin prices in the long run, traders said.
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