Oil rose above $100 a barrel on Thursday as some investors saw this week's price slide as overdone, although ample supply and concerns about the outlook for demand due to shaky economic growth limited the rally.
China's factory-sector growth eased in April, a survey showed on Thursday, suggesting the euro zone recession and sluggish U.S. demand may be weighing on China's recovery. Another survey showed India's factories lost momentum in April.
Brent crude rose 83 cents to $100.78 a barrel by 1155 GMT on Thursday after trading as low as $99.51. It fell more than 2 percent on Wednesday and has lost almost 10 percent this year. U.S crude was 50 cents higher at $91.53.
"Yesterday's sell-off was a bit overdone," said Christopher Bellew, a broker at Jefferies Bache. "I am not quite as pessimistic as everybody else. In general, the Chinese economy is growing and the American economy is better, but sometimes it doesn't happen as quickly as people expect.
"The fact that Brent has gone back above $100 today gives me every expectation we will gradually work our way back to $103-104."
Following increasingly weak economic surveys which have raised doubts about a recovery and a drop in inflation, the European Central Bank cut its main interest rate by 25 basis points to a record low of 0.50 percent on Thursday. [ID;nL6N0DJ103]
The oil price drop has caused concern in some oil-exporting countries, such as Iran and Venezuela, but Europe's largest oil company Royal Dutch Shell, which reported earnings on Thursday, said it was not worried as lower prices will help economic prospects and ease industry cost pressures.
"We're structured around a lower oil price so it is not bad for us. It might shake a few of the players who have chased the price up, and just provide a little bit of a boost for the macro economy," Chief Financial Officer Simon Henry told a news conference.
While the demand picture is shaky, supplies are strong. Oil output from the Organization of the Petroleum Exporting Countries rose in April, according to surveys this week.
And weighing on oil prices on Wednesday, a U.S. government report showed crude stocks in the United States hit a record high of 395.3 million barrels.
"It all comes down to demand. We are oversupplied at the moment because consumption levels have just not picked up. The assumption is we should be seeing demand growing at a much stronger pace at this point of the year," said Carl Larry, president of Houston-based Oil Outlook and Opinions.
Despite bearish developments on the oil demand and supply front, Wednesday's pledge by the U.S. Federal Reserve to stick to its monetary stimulus plan has provided some support.
Investors are now waiting for the U.S. non-farm payrolls report for April scheduled for release on Friday. (Editing by Jane Baird and Keiron Henderson)