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Oil rose slightly to near $85 a barrel Monday, recovering part of the large drop from the previous session amid hope that weak U.S. economic growth may trigger new stimulus measures.
By early afternoon in Europe, benchmark oil for August delivery was up 38 cents at $84.83 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, crude fell $2.77 to settle at $84.45 in New York.
In London, Brent crude for August delivery was up 42 cents to 98.61 per barrel on the ICE Futures exchange.
The Labor Department on Friday said the U.S. economy added 80,000 jobs last month, which was fewer than expected and prompted speculation that the U.S. Federal Reserve may implement more monetary stimulus measures known as quantitative easing.
Last week, the European Central Bank and the People's Bank of China both cut lending rates in the bid to boost flagging economic growth.
"We're still stuck in this mode of slow growth, which means weak demand," energy trader and consultant Carl Larry of Oil Outlooks and Opinions said. "We have seen the ECB and China both take aggressive measures to ensure economic recovery and stimulate growth. We will need the U.S. Fed to do something similar."
China said Monday that its annual inflation rate fell to 2.2 per cent, the lowest since January 2010. Analysts said slowing inflation should give policymakers more room to implement stimulus and boost demand in the world's second-largest crude consumer.
"There really is very little comfort out there for any bulls that remain in the market," said energy consultants KBC in London. "The economic outlook remains bleak, oil demand growth is faltering ... and crude supply is high despite the ongoing strike in Norway and the loss of Iranian exports."
A strike by oil workers in Norway, the largest oil exporter in Western Europe, helped support prices, especially for the Brent contract. After weeks of unsuccessful negotiations, employers will lock out workers from Monday midnight, which some expect will lead the government to forcibly end the labour dispute.
"The lockout ... is likely to largely paralyze the entire North Sea oil production of" Norway, totalling 1.6 million barrels per day, said a report from Commerzbank in Frankfurt. "The more the strike escalates, the sooner it is likely to end. Thus the price-supporting effect of the oil strike ... will probably be only temporary in nature."
In other energy trading, heating oil was up 0.68 cents at $2.7167 per gallon and gasoline futures gained 0.21 cents to $2.7181 per gallon. Natural gas gained 3.2 cents to $2.808 per 1,000 cubic feet.
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Alex Kennedy in Singapore contributed to this report.
