Oil prices bounced back more than a dollar on Monday, after hitting 5-1/2-year lows of $60.28 earlier in the session, as traders began pricing in expectations of improving manufacturing data to be published later this week.
Brent fell as much as 2.5 per cent after the International Energy Agency (IEA) forecast further price falls and Organization of the Petroleum Exporting Countries (OPEC) chief defended the group's decision not to cut its output target.
Oil producers group OPEC can ride out a slump in oil prices and keep output unchanged, its head Abdullah al-Badri said on Sunday, arguing market weakness did not reflect supply and demand fundamentals and could have been driven by speculators, pulling down prices in early Asian trading.
But the market recovered to $62.95 a barrel as traders said the market was pricing in expectations of improving global manufacturing data to be published this week.
"With preliminary manufacturing PMI scheduled to release this week, it may give some support to falling oil prices", said Singapore-based Phillip Futures on Monday.
"Expectations for this month's PMI are favourable which should prevent a further drop for the week. Provided manufacturing PMI figures are favourable, we expect to see a slight recovery to $61.81 for WTI Feb '15 and $63.26 for Brent February 15 for this week," it added.
Brent crude for January delivery was trading up 90 cents at $62.75 a barrel by 0338 GMT. The benchmark fell to $60.28 right after the start of the electronic session, the lowest since July 2009.
US crude for January delivery was up 0.64 cents at $58.45 a barrel, after hitting a low of $56.25, down 2.7 per cent, the lowest since May 2009.
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