Brent crude oil steadied at around $107 per barrel on Thursday after its biggest fall in five months on signs of faltering economic growth and rising stocks of fuel.
Oil fell more than 3 percent on Wednesday following a disappointing U.S. jobs report and a sharp spike in U.S. oil inventories to their highest level since 1990.
Commodities have under-performed other assets for several years and many big investors have begun to reduce holdings of oil, metals and other raw materials. So far this year the S&P GSCI index of oil and commodities is down 2.5 percent but Standard & Poor's 500 Index is up almost 9 percent.
"Investors are shifting out of oil and commodities and into equities after poor returns," said Eugen Weinberg, head of commodities research at Germany's Commerzbank.
Brent futures for May delivery rose 5 cents to $107.16 per barrel by 1040 GMT, not far above this year's low of $106.78 hit on Wednesday. Brent fell $3.58 on Wednesday, its biggest one-day fall since early November.
U.S. crude was unchanged at $94.45 per barrel, after also shedding almost 3 percent in the previous session.
Gold also fell sharply with spot bullion down 1 percent at one point to a 10-month low of $1,541.14 an ounce.
After early signs of stabilisation in the world economy, the last month has seen a series of setbacks with U.S. and European recovery stuttering.
Cyprus narrowly escaped financial meltdown and euro zone economic sentiment has tumbled with surveys showing manufacturing across Europe slipping deeper into decline.
Lower economic growth brings less demand for fuel.
U.S. crude oil stocks rose 2.71 million barrels in the week to March 29, compared with analysts' expectations for a rise of 2.2 million barrels, data showed on Thursday.
U.S. crude inventories now total more than 388 million barrels, close to the all-time peak of 391.9 million barrels hit in 1982.
"There is now no shortage of oil in the United States or anywhere else. This is very clear. And we can see that the economic recovery is also not as good as we thought it was," said Ken Hasegawa, a commodity sales manager at Newedge.
"We see more downside pressure on oil prices."
Markets awaited key U.S. jobs data on Friday for clues to the health of the world's largest economy and indications on its appetite for oil.
According to a Reuters technical analysis, U.S. crude is expected to extend its losses to $93.57 a barrel, while Brent is seen dipping towards $105.66 a barrel.
Brent's premium to U.S. crude was just below $13 a barrel. The spread hit one-week high of $14.66 on Tuesday amid concerns a prolonged Exxon pipeline outage in the U.S. Midwest could lead to a buildup in stockpiles near the delivery point of the U.S. benchmark contract in Cushing, Oklahoma.
However, oil prices may draw support from geopolitical tension and supply worries stemming from the standoff between Iran and the West over Tehran's disputed nuclear programme.
Talks between Iran and six major world powers on Tehran's nuclear programme set for Friday and Saturday in Almaty, Kazakhstan.
Investors kept a close eye on the Korean peninsula, after the United States said it was sending a missile defence system to the Pacific island of Guam to defend it from any attack from North Korea.
The announcement came just hours before North Korea's army said it had ratified an attack against the United States, potentially involving a nuclear strike, the latest in a series of provocations testing President Barack Obama's policy of "strategic patience" with Pyongyang. (Additional reporting by Luke Pachymuthu in Singapore; Editing by James Jukwey and Alison Birrane)