Oil rose above $57 a barrel on Monday as traders saw the previous session's near 4 percent fall as excessive and violence in Africa's top oil exporter Nigeria lent support.
Nigeria's main militant group said it would blockade key waterways in the Niger Delta to try to prevent crude exports. On Sunday, militants said they had blown up two oil and gas pipelines.
U.S. crude for June rose $1.00 to $57.34 by 1139 GMT. It fell $2.28 to settle at $56.34 on Friday, down from a six-month high above $60 hit earlier last week. Brent crude for July rose $1.31 to $57.29.
"There was quite a pullback on Friday and it might have been a bit overdone," said Rob Montefusco, a broker at Sucden Financial. "The whole Nigerian situation is quite supportive at the moment," he added.
Nigerian security forces launched an offensive against militant camps around Warri in the western Niger Delta on Friday after two oil vessels were hijacked and its soldiers were attacked, leading to the heaviest fighting in at least eight months. Oil has risen from a near five-year low of $32.40 reached in December as the market has tracked a rally in equities underpinned by hopes of an economic recovery.
European stocks rose on Monday, following on from losses in Asia.
RISK PREMIUM
While concern in the oil market about real or threatened supply disruptions has waned in recent months as the economic crisis has eroded global demand, analysts were keeping an eye on the Nigerian violence.
"We are maintaining a Nigerian risk premium for the week and our feeling is that the market in general has not priced in enough of such a premium," said Olivier Jakob of Petromatrix.
Besides firmer equities, supply curbs by OPEC have also bolstered prices. The group, which has agreed to cut 4.2 million barrels per day (bpd) of output since September, meets on May 28 to decide production policy.
So far, comments from ministers from the Organization of the Petroleum Exporting Countries suggest the group is unlikely to reduce supply further. But prices are still lower than some in the group would like to see.
Iranian President Mahmoud Ahmadinejad said on Monday OPEC's second largest oil exporter considered an oil price of $80 to $90 barrel as "suitable", the semi-official Mehr news agency reported.
Crude oil speculators on the New York Mercantile Exchange shifted to a small net long position in the week to May 12, according to data released on Friday. Long positions are bets prices will rise.
In a development that may support gasoline, Sunoco Inc said on Monday production at its 178,000-bpd Marcus Hook refinery on the Pennsylvania-Delaware border was "impacted" by a fire after explosions at the plant.
The June U.S. crude contract expires on Tuesday and dealers said trading may be more volatile than usual as a result.
