Crude futures had sustained losses after a huge global equities sell-off earlier this week.
They then recovered as traders took the view that the Chinese economy - and its voracious demand for oil - was strong enough to withstand the stock market dive.
Demand for Iranian oil
The oil market's focus will begin to switch from heating oil as the northern hemisphere winter draws to an end, to petrol stocks as the US driving season approaches.
Petrol demand hits a peak as many Americans take to their cars for the summer holidays.
"If demand for crude oil rises beyond the current global output, prices will rise to compensate and alternative sources of energy will begin to replace petroleum"
T. Boone Pickens, Hedge Fund chief
Looking ahead, "the Iranian situation and the outlook for gasoline supplies entering the spring and summer season will be key features to assess," said Ed Meir, an analyst with Man Financial.
Traders are concerned that if Iran is punished with economic sanctions by the West over its disputed nuclear energy programme, then the key crude producer might retaliate by slashing oil exports, he said.
Oil 'reaches peak'
T. Boone Pickens, a leading Texas oilman, sees today's stubbornly high oil price as evidence that daily global production capacity is at - or very near - its peak.
"If demand for crude oil rises beyond the current global output of roughly 85 million barrels per day, prices will rise to compensate and alternative sources of energy will begin to replace petroleum.
"If I'm right, we're already at the peak [the point at which half of the world's reserves are depleted], the price will have to go up," Pickens said earlier this week in Doha.
Confidence about the world's supply of oil is being undermined by what Pickens said were overoptimistic estimates of Middle Eastern reserves, mainly by Saudi Arabia.
The Saudis and other major producers ban independent verification of their reserves.
"I think there are less reserves around the world than are being reported," said the 78-year-old, who now heads the Dallas-based hedge fund BP Capital. "There are no audited reserves in the Mideast. It makes me suspicious."
Pickens is credited with a history of prescient predictions about the direction of oil markets. His bets have paid off handsomely. BP Capital's returns have exceeded 800 per cent since 2001, he said.
Most industry and government analysts are far less pessimistic than the Pickens.
Most believe petroleum will be a growing energy source for decades. The US government expects oil demand to rise to 120 million barrels a day by 2030 and says a peak in output won't arrive until mid-century.