Oil rose above $109 a barrel on Friday supported by persistent concern about supplies, falling U.S. crude inventories and the Federal Reserve's decision this week to leave its stimulus programme unchanged.
Global benchmark Brent crude was still heading for a weekly drop on the return of some Libyan output, a reduced prospect of military action against Syria and signals from Iran that it is looking for a thaw in relations with the West.
Brent crude for November was up 73 cents to $109.49 by 1358 GMT. The benchmark has fallen about 3 percent this week. U.S. crude for October, which expires on Friday, dropped 31 cents to $106.08.
"I think the big stories in the market are the improvement in Libyan exports and the containment of the Syrian war - at least for now," said Christopher Bellew, a broker at Jefferies Bache in London.
"This, combined with the speculative length in the market, will very likely lead prices lower."
Although Libya's production had recovered to 620,000 barrels per day (bpd) as of Wednesday after protesters agreed to reopen some oilfields, over half remains offline and concern persists of further disruption.
"Supply tightness seems to be easing but Libya's export recovery is not something that's being assured," said Sijin Cheng, an analyst at Barclays.
Libyan output had collapsed to below 200,000 bpd in a stalemate between protesters and the government that lasted more than a month. As well as Libya, significant supply remains offline in Nigeria and in southern Iraq.
Nigerian supply remains constrained. Export schedules for November issued on Friday indicate lower exports of Bonny and no new cargoes of another large crude stream, Bonga. Nigerian oil is priced off Brent and outages support the London benchmark.
World shares steadied at a five-year high on Friday, while bonds and other commodities were consolidating after the Fed's shock decision announced on Wednesday to keep its monetary stimulus intact.
Lending support to oil, U.S. crude inventories fell 4.37 million barrels last week to 356 million barrels, the lowest since March 2012, according to data issued by the U.S. Energy Information Administration on Wednesday.
Iranian President Hassan Rouhani has sent signals that he is looking for a thaw in relations with the United States. The White House said leaders from both countries may meet next week.
Western sanctions targeting Iran's oil exports over Tehran's nuclear programme have cut Iranian crude shipments by more than half, or more than 1 million bpd, since early 2012.
"This does not mean we shall see an immediate lift to sanctions," said Andrey Kryuchenkov, analyst at VTB Capital. "However, matters are starting to look more promising." (Additional reporting by Florence Tan and Jacob Pedersen; editing by William Hardy and Keiron Henderson)