Accordingly, Brent crude oil futures closed at $77.05/barrel, up 75 cents, or 0.98%. US WTI crude oil closed at $74.25/barrel, up 69 cents, or 0.94%.
Traders are looking to China's economic stimulus plans to boost growth as supplies are tight after the Christmas and New Year holidays, said foreign exchange market analyst Razan Hilal.
"Although the market is currently in a stable state, the increase is mainly due to expectations of improved demand thanks to increased traffic during the holidays and economic commitments from China. However, the main trend is still bearish," Hilal said.
It appears some investors have started to factor in the small risk of disruption to Iranian crude exports to China, said UBS analyst Giovanni Staunovo.
Concerns about sanctions tightening supply have boosted oil demand from the Middle East, with Saudi Arabia’s oil prices to Asia rising in February, marking the first increase in three months.
Higher inflation in Germany has raised concerns that the European Central Bank (ECB) may not cut interest rates as quickly as expected across the eurozone, according to analyst Ashley Kelty of Panmure Liberum.
Harry Tchilinguirian, director of research at Onyx Capital Group, said technical indicators for oil futures are currently overbought and sellers may be ready to step in again to take advantage of this strength, thereby limiting further price gains.
Investors are awaiting more economic data, including the US December non-farm payrolls report due on Friday.
"We are seeing a very tight physical market, with demand outstripping supply. This will lead to more inventory draws globally," said Phil Flynn, senior analyst at Price Futures Group.
