Brent crude rose this afternoon on better-than-expected US jobs data and a pipeline fire in Iran, but retreated from highs as Wall Street extended its plunge on fears of an economic slowdown.
Brent bounced into positive territory near midday when the European Central Bank said it was ready to buy Italian bonds if Italy commits to accelerate economic reforms to bring down the country's debt.
Trading was volatile as Wall Street shrugged off jobs data that was not strong enough to alleviate concerns about slower US growth and Europe's debt woes.
ICE Brent crude for September rose $1.40 to $108.65 a barrel by 5.17 pm after briefly turning lower near midday and having jumped to $110.26 reacting to the jobs data.
US September crude fell 90 cents to $85.73 a barrel, well off its $88.32 peak reached after the jobs report, but off its session low of $82.87, the lowest since 26 November, 2010. It slid almost 6% yesterday.
Both Brent and US oil rallied immediately after the US Labour Department said nonfarm payrolls increased by 117,000 last month, above market expectations, as private employers stepped up hiring.
Brent dropped nearly $6 in the previous session on concern oil demand will slip as US growth falters and Europe's debt crisis worsens. In early trade today, it fell as low as $104.30, its lowest since 27 June.
News of an Iranian pipeline explosion that shut flows of up to 40,000 barrels per day (bpd) lifted oil prices from early lows.
But Iran, the second-largest OPEC producer after Saudi Arabia, later said it was pumping oil at full capacity.
Iran also said OPEC oil ministers will meet if prices continue to fall.
'If the downward oil price trend continues the ministers of OPEC will hold talks and negotiate,' Iran's OPEC governor, Mohammad Ali Khatibi, said on the Oil Ministry news website SHANA.
