Brent crude oil steadied above $111 per barrel on Wednesday, supported by buoyant stock markets which gained on positive economic news from the United States.
Investors awaited U.S. data on factory orders and an employment report to confirm expectations of a revival in demand growth following upbeat economic data from the U.S. and China.
Signs of a strengthening U.S. economy and continued support from the Federal Reserve pushed European stock indices to their highest level since the 2008 financial crisis on Wednesday.
"Oil is in a 'wait and see' mode for the economic data to confirm the really good numbers we had," said Harry Tchilinguirian, oil strategist at BNP Paribas in London.
Brent crude futures slipped 22 cents to $111.39 a barrel by 1222 GMT, off an earlier high of $112.23. U.S. light crude oil lost 19 cents to $90.63.
Analysts looked for U.S. economic data to impact oil.
Ahead of an employment report in the private sector from ADP, economists in a Reuters survey expected that 170,000 jobs were created in February versus 192,000 new jobs in January.
"The Fed's plan of action is highly dependent on meeting economic objectives. If the ADP report shows a positive change but not too much, that means the Fed will continue with asset buying," Tchilinguirian said.
Economists polled by Reuters expected U.S. factory orders for January to fall 2.2 percent compared with a 1.8 percent rise in the prior month.
"We have now two solid support levels on oil ... Now that we have that floor, we just need something to allow it to bounce off," Tchilinguirian said.
A surge in U.S. and European equities was driven, in part, by data showing the U.S. services sector accelerated to its fastest pace in a year in February, helped by a rise in new orders and demand for exports.
"The positive tone was supported by ongoing policy support and solid economic data from the U.S. and Europe," analysts at ANZ said in a report. "The US ISM non-manufacturing index surprised on the upside at 56.0 in February, suggesting strong growth in this part of the US economy that is a big employer."
The oil market is also watching developments in Venezuela, following the death of President Hugo Chavez after a two-year battle with cancer. Investors are on the lookout for a succession plan in the OPEC nation. The country's oil industry was operating normally and no disruption was expected, state oil company PDVSA said.
"His death is not likely to have any major impact on the oil market," Tetsu Emori of Astmax Investments said. "But investors are waiting and watching."
Brent is expected to keep rising to $113.22 per barrel, as it has cleared a resistance at $111.83, while a rebound target at $91.40 remains unchanged for U.S. oil, according to Reuters technical analyst Wang Tao.
Yet gains were capped by medium-term concerns such as rising U.S. crude supply and the country's fiscal crisis, which have pushed Brent down about $8 a barrel since a high of $119.17 touched in mid-February.
Weekly U.S. inventory data released by the American Petroleum Institute showed a steep build of 5.6 million barrels in domestic crude stockpiles for the week to March 1, including a 259,000-barrel build at the Cushing, Oklahoma, delivery point for the U.S. oil contract.
Product stockpiles fell slightly more than analysts' expectations, however. Traders will now be watching for weekly stockpile data from the U.S. Energy Information Administration, due out on Wednesday, for further insight into inventories. (Additional reporting By Manash Goswami in Singapore; editing by James Jukwey)