SINGAPORE: Brent futures rose to $107 a barrel on Tuesday as the steepest fall in three weeks prompted fresh buying, with concerns of turmoil in emerging economies and a slowdown in China keeping the gains in check.
Oil also drew support from expectations of a steep fall in US distillate inventories, which would indicate ongoing robust demand for heating oil because of bitter winter cold in northern countries.
That helped crude futures diverge from other assets such as Asian shares, which remained near five-months lows. Brent crude touched a high of $107.10 a barrel and was up 29 cents at $106.98 by 0329 GMT.
Brent fell $1.19 in the previous session, its biggest decline since Jan. 2. US oil gained 12 cents to $95.84, after sliding the most since Jan. 13.
"The recovery in oil is a knee-jerk reaction to the steep fall in prices we saw overnight," said Jonathan Barratt, chief executive of commodity research firm Barratt's Bulletin in Sydney. "The outlook is weak as some of the numbers out there, particularly from China, are a bit of a concern."
A forecast fall in distillate inventories is overshadowing the rise in crude stockpiles for the second straight week in the world's top oil consumer.
A Reuters survey of analysts, taken ahead of weekly inventory reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA), showed distillate stocks, including heating oil and diesel fuel, decreased 2.4 million barrels on average.
US crude may have risen about 2.7 million barrels in the week ended Jan. 24, gaining for a second week as inventories rose 990,000 barrels last week, the survey indicated.
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