Oil rose above $109 a barrel on Thursday, rebounding after four days of losses, although a subdued outlook for demand growth and easing supply concerns limited the gains.
U.S. data showing the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, the latest indication of labour market recovery in the top oil consumer, gave oil a lift.
Brent crude for April gained $1.09 to $109.61 by 1307 GMT although Brent for May, which becomes the front-month contract on Friday, was up 55 cents. Brent fell for the last four sessions. U.S. oil fell 8 cents to $92.44.
"The U.S. jobs data is helping, but it looks like a last trading day short-covering move for April Brent," said Tony Machacek, an oil futures broker at Jefferies Bache in London.
Oil has come under pressure this week from a subdued outlook for demand growth in top consumers the United States and China and easing supply concerns. A firm U.S. dollar weighed on prices earlier in Thursday's session.
"It could be related to some buying ahead of the contract expiry," said Carsten Fritsch at Commerzbank of April Brent's gain. "News that South Sudan plans to resume oil production in three weeks' time is weighing on the price of Brent."
Two of the three most closely watched oil forecasters - the International Energy Agency and U.S. government's Energy Information Administration - lowered global oil demand growth forecasts this week. The third, OPEC, flagged downside risks to the outlook.
Comments by China's central bank on stabilising inflation expectations reinforced concern it may drop its pro-growth policy before economic expansion gathers full momentum. The remarks pressured most markets in Asia.
Supply concerns have taken a back seat for now.
South Sudan said on Tuesday it would be ready to restart oil production - shut down for more than a year - within three weeks and on Wednesday a U.S. government report said crude stockpiles rose last week.
OPEC production is expected to trend higher as Saudi Arabia adds to supplies. Saudi cut back its output in the last two months of 2012 because of factors including weaker Asian demand and a lower domestic need for crude in power plants.
"These factors will likely reverse heading into the summer," Morgan Stanley said in a report on Thursday. "Coupled with other sources of demand, both seasonal and exogenous, we anticipate demand for Saudi crude will begin to increase in 2Q13 by up to 500,000-700,000 barrels per day."
Oil's gain was limited by a stronger U.S. dollar, which was near a seven-month high against a basket of currencies on Thursday. A stronger dollar can make oil more expensive for other currency holders. (Additional reporting by Manash Goswami and Ramya Venugopal; Editing by Alison Birrane)