SINGAPORE: Brent futures edged up towards $109 per barrel on Thursday as a steep drop in the previous session brought in bargain hunters, while investors awaited further cues from a European Central Bank policy meeting and critical US jobs data.
Oil markets also appeared to win some stability from the equity markets, where Japanese stocks inched up and the broader market indicator held steady.
On Wednesday, Brent had dropped 3 percent and US crude 4 percent as fears of a delayed recovery in China and a recession in the euro zone muddied the outlook for oil demand.
"The markets have reacted primarily to what appears to be a steady stream of weak economic data out of China and the euro zone as well; the fundamentals point to near-term weakness," said Victor Shum, a senior partner at oil consultancy IHS Purvin & Gertz in Singapore.
"In the immediate term, some investors could see a buying opportunity after the sharp drop yesterday and we could see a spillover from the equities markets which are up," he added.
Front-month Brent futures rose 40 cents to $108.57 per barrel at 0635 GMT. Brent fell to $107.67 on Wednesday, the lowest since Sept. 20.
NYMEX crude for November delivery rose 23 cents to $88.37 a barrel, after dropping to its lowest since Aug. 3 in the previous session.
Even as economic worries in Europe and China kept investors jittery, data from the US offered a ray of hope, with private employers adding more jobs than expected in September and new orders helping a pick-up in the service sector.
US JOBS DATA EYED
This data precedes the more widely followed jobs numbers from the US Labor department on Friday, which are expected to show a slight improvement from the previous month.
Employers are expected to have added 113,000 jobs to their payrolls, an increase from 96,000 in August, with the unemployment rate edging up by a tenth of a percentage point to 8.2 percent, according to a Reuters survey.
Also supporting US crude, inventory levels unexpectedly dropped last week despite an increase in imports. Crude stocks fell by 482,000 barrels, compared with expectations for a 1.5 million-barrel increase.
In Europe, policymakers at the ECB may hold interest rates steady at Thursday's meeting to allow time for new details on the health of the euro zone economy and for Spain to ask for aid.
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