Oil extended gains above $58 on Friday after climbing almost 4 percent the previous day, as a recovery in equity markets countered increasing signs of a global recession and slowing demand.
Expectations that OPEC would cut output again late this month also lent support, but some analysts said it was premature to conclude that the market had hit a bottom, pointing to high U.S. oil stockpiles and slowing world oil demand growth, reported Reuters.
U.S. crude futures for December rose 33 cents to $58.57 a barrel at 0316 GMT, after closing $2.08 higher on Thursday.
Oil is down almost $90 a barrel since its record of $147.27 in July, and touched $54.67 on Thursday, the lowest since January 30, 2007.
London Brent crude for January, the new front-month, edged up 27 cents to $56.51 a barrel.
"I definitely don't agree with the view that oil prices have bottomed out. No one can say where that would be," said David Moore, commodities strategist at the Commonwealth Bank of Australia, adding that the share market rebound in the United States, Australia and Asia as well as the dip in the U.S. dollar aided oil's rise.
Stock markets in Japan and Hong Kong led the region's surge on Friday on the back of the more than 6 percent rally in U.S. equity markets overnight, as investors snapped up beaten down shares despite more grim economic news.
The U.S., China and Germany all provided fresh evidence of the global economic slide, while the Organization for Economic Co-operation and Development cut its economic output forecasts for the United States, Japan and the euro zone, saying it sees all three sliding into recession.
The dollar eased versus the yen on Friday after a sharp rise a day earlier, as investors returned to the perceived safe haven of the Japanese currency amid fears about the global credit crisis.
"Without any doubt the economy is still a major worry and key factor that still hangs over the market," Moore said.
Following OPEC President Chakib Khelil's comments on Thursday that the cartel would "take the right decision" at an emergency meeting on November 29, analysts said the market had likely already discounted the eventuality of additional output cuts.
"But the question is how much," said BNP Paribas analyst Harry Tchilinguirian.
Most analysts expect the Organization of the Petroleum Exporting Countries to make at least another 1 million barrels per day (bpd) cut, on top of the 1.5 million bpd members of the group have so far shown that they have started cutting after last month's decision.
"If a potential further cut in OPEC supply ends up too low, it will have little effect on the current market psychology which remains demand/economy focused," Tchilinguirian said in a note.
"On the other hand, if the potential additional cut is announced too high, doubts will be raised on whether the implementation (on top of the previous cut) is realistically achievable given fiscal balances of some of the members are already strained by the fall in prices."
U.S. inventory data also pointed to a more bearish trend, as total product demand fell 6.6 percent in the past four weeks and after the International Energy Agency cut its global oil demand growth forecasts amid more evidence the world economy is far weaker than thought.
U.S. crude stocks were steady against expectations of an increase, gasoline inventories rose by a more-than-expected 2 million barrels, heating oil rose 1.3 million barrels ahead of winter, while distillates gained 600,000 barrels.