Oil prices clawed back some ground on Thursday after sliding to 15-month lows in the previous session as markets calmed somewhat after Credit Suisse was thrown a financial lifeline by Swiss regulators.
But battered by fears of a deepening crisis for banks worldwide, market sentiment remained fragile with both benchmarks giving up some early Thursday gains that saw Brent climb by more than $1.
As of 0427 GMT, Brent crude futures were up 58 cents or 0.8% to $74.27 per barrel. West Texas Intermediate crude futures (WTI) rose 51 cents, also 0.8%, to $68.12 a barrel.
On Wednesday, the third straight day of declines, U.S. crude fell below $70 a barrel for the first time since December 20, 2021.
Brent has lost nearly 10% since Friday's close, while U.S. crude is down about 11%.
Credit Suisse on Thursday said it would borrow up to $54 billion from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.
"Market sentiment deteriorated as the banking crisis expanded to Europe from the U.S...The future trend will depend on the level of market angst even if fundamentals are not necessarily showing much in the way of bearish signs," analysts from Haitong Futures said in a note to clients.
OPEC's rosier outlook for China oil demand also supported oil prices, said Lim Tai An, analyst at Phillip Nova Pte.
OPEC increased its Chinese demand forecast for 2023 earlier this week and a monthly report from the International Energy Agency (IEA) on Wednesday flagged an expected boost to oil demand from resumed air travel and China's economic reopening after abandoning its zero-COVID policy.
But oversupply concerns remain.
The IEA said in the report that commercial oil stocks in developed OECD countries have hit an 18-month high, while Russian oil output stayed near pre-war levels in February despite sanctions on its seaborne exports.
U.S. crude oil stockpiles also rose last week by 1.6 million barrels, exceeding analysts' expectation of a 1.2 million barrels rise, the Energy Information Administration said on Wednesday.
Later on Thursday, European Central Bank policymakers are seen leaning towards a half-percentage-point rate hike as the euro zone economy is picking up strength and inflation is set to remain high for years.
Higher interest rates can lead to depressed demand for oil as economic growth slows, but concerns about a widenening financial crisis for the banking sector could also weigh on oil demand. (Reporting by Laura Sanicola and Muyu Xu; Editing by Edwina Gibbs)