Oil retraced part of a steep four-session drop on Thursday as worries about Ireland's debt crisis eased and a sharp crude inventory drawdown in top consumer the United States encouraged investors.
Oil shrugged off U.S. data showing a small increase in claims for unemployment benefits, with U.S. crude oil futures up $1.37 to $81.82 at 1516 GMT and ICE Brent up $1.55 to $84.83.
Although initial jobless claims rose in line with expectations, the four-week average of new jobless claims, considered a better measure of underlying labor market trends, dropped 4,000 to 443,000, the lowest level since the week to September 6, 2008.
Dublin's agreement to work with a European Union-IMF mission to shore up its troubled banking sector soothed investors' worries, but oil's bounce was held in check by lingering jitters over Irish debt.
"I think while the uncertainty's still there over whether there's going to be a bailout or not there's going to be a lot of fluctuation," said James Hughes, a strategist at CMC Markets.
The state of other euro zone countries' finances also limited crude's gains.
"Even should Ireland be rescued, so to speak, the market might shift its focus again to Greece and Portugal," said Eugen Weinberg, an analyst at Commerzbank.
IRISH CENTRAL BANK
Concerns about the euro zone's fiscal health knocked about 8% off a 25-month high last week, sending oil to a low of $80.06 on Wednesday, its weakest since October 20.
Ireland's central bank chief said on Thursday he expected the country to take tens of billions of euros in loans from European partners and the IMF to tackle its debt woes.
"For now the market seems to be increasingly relaxed that measures are being put in place (in Ireland)" said Jim Reid, a strategist at Deutsche Bank.
The euro rose too, on new-found optimism in the response to Ireland's debt crisis, while the greenback slid about 7% against a basket of currencies.
INVENTORIES
U.S. crude stockpiles dropped the most in more than 14 months last week, as fewer imports and higher refining rates dented inventories, a weekly government report from the Energy Information Administration showed on Wednesday.
Inventories unexpectedly fell by 7.29 mln barrels to 357.6 mln barrels in the week to November 12, while crude imports fell 226,000 barrels per day (bpd) to 7.83 mln bpd.
Stocks of oil products also fell, although more closely in line with analyst expectations.
Gasoline fell by 2.66 mln barrels, versus forecasts for an 800,000-barrel draw, while distillate stocks declined 1.11 mln barrels compared with a projected 2.2 mln drop.
But crude inventories at the key Cushing, Oklahoma hub rose 1.27 mln barrels to 33.07 mln, depressing the value of U.S. crude relative to European benchmark Brent.
Cushing is the delivery point for the New York Mercantile Exchange's benchmark West Texas Intermediate (WTI) crude futures.
