By early afternoon in Europe, benchmark crude for September delivery was up 9 cents to $75.83 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, prices peaked at $76.74 before falling back. On Thursday, the contract fell $2.28 to settle at $75.74.
Oil has dropped from above $81 a barrel earlier this week amid resurgent investor fears that the global economy may not grow in the second half as much as previously expected.
"We suspect the short-term bias in energy will remain lower for some time longer," said senior commodity analyst Edward Meir at MF Global in New York. "Many commodity markets, including energy, were selling off sharply only six weeks ago on account of slowing growth prospects, but have since rallied sharply and so it is only logical to conclude that more of these gains will need to be rolled back so that valuations will be in closer alignment with the new macro realities."
Most Asian stock indices rose but Europe seemed unable to break a weeklong slump after the Dow Jones industrial average fell 0.6 percent Thursday.
The Labor Department on Thursday said last week's applications for jobless benefits reached the highest level in almost six months. In addition, stocks fell on disappointing earnings from Cisco Systems Inc., Sara Lee Corp. and retailer Kohl's Corp.
"The ghosts of a global economic slowdown are back and haunting the oil market again," Barclays Capital said in a report. "No doubt, like China, the growth in U.S. oil demand is likely to slow down as the months progress."
Market experts reiterated views that oil prices were fluctuating because of external factors.
"We honestly would have a hard time getting bullish - based strictly on supply and demand - even at prices half of what they are right now," said analysts at U.S. consultancy Cameron Hanover. "Equities, currencies, low interest rates and the carry trade and economic statistics have been leading oil by the nose all year. It is only now, with all of these looking rather grim, that oil prices have been allowed to follow their own supply and demand factors."
In other Nymex trading in September contracts, heating oil rose 1.12 cents to $2.0127 a gallon, gasoline added 0.68 cent to $1.9616 a gallon and natural gas gained 1.4 cents to $4.310 per 1,000 cubic feet.
In London, Brent crude was up 28 cents at $75.80 a barrel on the ICE Futures exchange.
