Oil prices rose above $130 a barrel today, after a 10 per cent decline in the past three trading sessions lured buyers.
Easing tensions between Iran and the West and worries that high prices and a weaker US economy will undermine demand have sent US crude down $15 in just three days, putting it on track for its biggest weekly fall since the contract started trading in New York in 1983.
US light crude rose $2.75 to as high as $132.02 a barrel and it was trading at $131.08 by 12.45pm. Still, the price levels were way off its June 11th record high of $147.27.
London Brent crude was trading $1.81 up at 132.88.
"We have seen a significant move lower this week and after last night's push lower, beware some short covering today," said Robert Laughlin of MF Global. Limited support also came from oil producers Brazil and Nigeria.
Oil workers in Brazil said they would expand a strike to all production and refining units of state-run Petrobras. So far the strike has had no affect on output.
Sabotage attacks on oil facilities in Nigeria continue to shut nearly a fifth of output in the world's eight largest oil exporter, cutting some production from one field as soon as output from others is restored.
However, traders were cautious that oil prices could be knocked by a further easing of the tension surrounding Iran's nuclear programme, ahead of a meeting between Iran and world powers at the weekend.
The United States said this week it was sending an envoy to Geneva to join nuclear talks with Iran for the first time, to underline to the Islamic Republic and others that Washington wanted a diplomatic solution to the impasse.