Oil rose above $67 a barrel today after a 3.5 per cent decline the previous day, boosted by forecasts of higher oil prices from US investment bank Goldman Sachs.
US crude for July delivery rose $1.10 to $67.22 a barrel by 11:35am. London Brent crude gained $1.43 to $67.31.
Further support for oil prices came from a weaker US dollar, which can boost the appeal of oil and other commodities as a hedge against inflation.
"For the better or for the worse, a switch in the Goldman price forecast rarely does not have a price influence and we will need to take it as a market input for the next few days," said Petromatrix analyst Olivier Jakob.
Goldman Sachs raised its end of 2009 oil price forecast to $85 a barrel from $65 and introduced a new end of 2010 forecast of $95.
"The recent rally in WTI (US crude) prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity," Goldman said in a research note.
Oil closed down more than $2 on Wednesday following a report by the US Energy Information Administration that US crude inventories rose 2.9 million barrels.
Saudi Oil Minister Ali al-Naimi has said the producer group OPEC would wait until crude inventories fall to around 53 days of forward cover before considering raising output, nearly 10 days below current levels.