Brent crude broke a five-day losing streak on Tuesday, rising on optimism over Chinese oil demand, record-high U.S. equities and North Sea supply disruptions.
Gains were limited, however, by medium-term concerns such as rising U.S. crude supply and the country's fiscal crisis.
Brent crude futures rose $1.52 per barrel to settle at $111.61. U.S. crude gained 70 cents a barrel to settle at $90.82, snapping a three-day losing streak.
Commodity investors took encouragement from China's vow on Tuesday to deliver economic growth this year of 7.5 percent and concentrate on boosting domestic consumption. The target is unchanged from 2012.
The statement from outgoing Premier Wen Jiabao countered concerns about demand in the world's No. 2 oil market. Purchasing manager surveys over the weekend had suggested growth in China's key manufacturing and service sectors may be slowing.
"China is targeting 7.5 percent growth and that could mean further economic stimulus there," said Matt Smith at Summit Energy in Louisville, Kentucky.
Also lifting oil, Smith said, was the "euphoria" in equities markets on signs that a U.S. economic recovery is gaining steam.
The Dow Jones Industrial Average rose to a record high on Tuesday, breaking through levels last seen in 2007. The Dow has gained more than 8 percent this year.
So far, investors have shrugged off most concerns about $85 billion of automatic U.S. government spending cuts that came into effect on Friday, although the International Monetary Fund has estimated they could cut 0.5 percentage point from U.S. growth.
Markets are awaiting U.S. nonfarm payrolls data due this week for further clues on the health of the U.S. economy and the future of the Federal Reserve's monetary easing program, analysts said.
Oil investors are also waiting for U.S. crude inventory data due from the U.S. Energy Information Administration on Wednesday. The figures are expected to show that U.S. crude stockpiles climbed last week for a seventh straight week, according to a Reuters poll of analysts.
"Those weekly inventory numbers may bring us back to earth," Smith said.
The head of the world's largest crude-exporting company, CEO Khalid al-Falih of Saudi Aramco, said on Tuesday that global oil demand has recently "moderated".
A North Sea pipeline closure has helped halt a downtrend that saw Brent sink in the previous session to $109.58, the lowest level since Jan. 17.
The 80,000-barrels-per-day (bpd) Brent system was shut for the second time in seven weeks after oil and associated gas was found to have leaked into a leg of the 10,000-bpd Cormorant Alpha platform - offline since January.
In Nigeria, Royal Dutch Shell declared force majeure on its Bonny Light crude deliveries following a pipeline leak discovered on Sunday. It was not immediately clear how long it would take to repair the line.
(Additional reporting by Peg Mackey in Lodnon and Ramya Venugopal in Singapore; Editing by Peter Galloway and Dale Hudson)