Oil prices clawed back some ground after sliding to 15-month lows in the previous session as markets calmed somewhat after Credit Suisse was thrown a financial lifeline by Swiss regulators.
But, battered by fears of growing stress on banks worldwide, market sentiment remained fragile with both benchmarks giving up some early Thursday gains that saw Brent climb by more than $1.
As of 0742 GMT, Brent crude futures were up 60 cents or 0.8 per cent to $74.29 per barrel. West Texas Intermediate crude futures (WTI) rose 47 cents or 0.7 per cent to $68.08 a barrel.
On Wednesday, the third straight day of declines, US crude fell below $70 a barrel for the first time since December 20, 2021.
Brent has lost nearly 10 per cent since Friday's close, while US crude is down about 11 per cent.
"Considering (this) is really macro-driven rather than oil fundamentals-driven, WTI could flirt with the idea of bottoming out at $60. But I don't really see a full-blown collapse," said Viktor Katona, lead crude analyst at data analytics firm Kpler.
Credit Suisse said on Thursday it would borrow up to $54 billion from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.
"Market sentiment deteriorated as the banking crisis expanded to Europe from the US. The future trend will depend on the level of market angst even if fundamentals are not necessarily showing much in the way of bearish signs," analysts from Haitong Futures said in a note to clients.
Opec's rosier outlook for China oil demand also supported oil prices, said Lim Tai An, analyst at Phillip Nova Pte.
Opec raised its China demand forecast for 2023 earlier this week and a monthly report from the International Energy Agency (IEA) on Wednesday flagged an expected boost to oil demand from resumed air travel and China's economic reopening after abandoning its zero-Covid policy.
But oversupply concerns remain.
The IEA said in the report that commercial oil stocks in the Organization for Economic Cooperation and Development (OECD) countries have hit an 18-month high, while Russian oil output stayed near pre-war levels in February despite sanctions on its seaborne exports.
US crude oil stockpiles also rose last week by 1.6 million barrels, exceeding analysts' expectation of a 1.2 million barrels rise, the Energy Information Administration said on Wednesday.
Later on Thursday, European Central Bank policymakers are seen leaning towards a half-percentage-point rate hike as the euro zone economy is picking up strength and inflation is set to remain high for years.
Higher interest rates can lead to depressed demand for oil as economic growth slows, but concerns about a crisis in the banking sector could also weigh on oil demand. -Reuters