Oil rose above $55 a barrel this afternoon, after a slide to a new 22-month low earlier in the session, depressed by the gloomy outlook for the world economy.
US light crude oil for December delivery was 70 cents up $55.65 a barrel by 14.08pm. It touched a new 22-month low of $54.13, its lowest since January 2007.
London Brent crude was 64 cents up at $52.95 a barrel. The market has been under pressure as evidence of a severe global slowdown continues to emerge.
"Amidst an endless chain of bearish economic data, crude prices seem incapable of finding a bottom," JP Morgan said in a research note.
"However, we suspect that the low in prices will be seen in the coming three months and reductions in capital expenditure and the postponement of future projects leads to the potential for a more bullish future," the US bank said.
Oil has fallen more than 60 per cent from its July record above $147 a barrel as the credit crisis has hit the real economy and dampened fuel demand in the United States, the world's biggest energy consumer and other industrial countries.
"Oil is still driven by concern about the weak outlook for oil consumption," said David Moore, commodity strategist at Commonwealth Bank of Australia. "Equity markets are not helping."
European shares fell to a three-week low following on from losses in Japan, while Wall Street is set to open lower.
OPEC, source of around 40 percent of the world's oil, has so far agreed to remove around 2 million barrels per day from oil markets to try to halt the oil market's slide.
Iran, for example, has called for another 1 million to 1.5 million bpd cut.
OPEC's President Chakib Khelil said last week a gathering of core oil producers in Cairo on November 29th could be expanded into a full-scale OPEC meeting.
But at the weekend he said the group might have to wait until another session set for December 17th in Oran, Algeria to reduce output further.