Oil rose above $66 a barrel on Friday, recovering from the previous day's drop to an eight-week low, but gains were limited by doubts about the strength of economic recovery and high fuel inventories.
U.S. crude futures <CLc1> rose 63 cents to $66.52 a barrel by 1005 GMT after dropping by $3.08 to close $65.89 on Thursday, the lowest settlement price since late July.
London Brent crude <LCOc1> gained 77 cents to $65.59.
Oil has been trapped in a range of between $65 and $75 for about two months as a lack of significant developments in fundamentals of supply and demand, which have remained slack all year, have forced investors to seek direction from technical chart analysis, equities and foreign exchange markets.
"There is a strong technical resistance at around the $65 level and prices are bouncing back now because the market still believes that prices will start rising towards the $75 level, when U.S. crude stocks come down in the fourth quarter," said Tony Nunan, an analyst at Mitsubishi Corp in Tokyo.
Oil had fallen by about $6 in the past two trading sessions.
Selling was triggered after government figures on Wednesday showed crude and fuel inventories in the United States, the world's top consumer, had risen again, suggesting oil demand was still weak.
In a research note published on Friday, Goldman Sachs said range-bound trading reflected "the end of a recession" and maintained its oil price forecasts, but raised its forecast for global oil demand. [ID:nLP428439]
The slow pace of demand recovery and signs of building supplies has prompted most analysts to leave their oil price forecasts unchanged in September, a Reuters poll showed on Friday. [ID:nLO135475]
All the financial markets will look to the next sets of economic data on Friday for guidance on the extent of recovery, with implications for oil demand growth.
Figures for release include U.S. durable goods orders for August, Reuters and University of Michigan consumer sentiment for September and U.S. new home sales data for August.
At talks in Pittsburgh, the United States, the Group of 20 countries pledged to keep emergency economic stimulus measures in place until a durable recovery was secured.
