VIENNA, Austria - Oil prices rebounded above $91 a barrel Tuesday, a day after plunging to an 8-month low on concerns a significant slowdown in global economic growth will undermine demand for crude.
With the world financial crisis far from over, however, analysts said any recovery in oil prices was unlikely to be strong or sustained.
"Prices have moved so far, so fast," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "I certainly wouldn't say the bounce today is indicative that we've reached a bottom in oil prices."
Light, sweet crude for November delivery was up $3.34 to $91.15 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. The contract fell $6.07 to settle on Monday at $87.81, the lowest level since Feb. 6.
Prices have fallen almost 40 percent since reaching a record at $147.27 on July 11.
Investor expectations about oil demand have turned completely around in the last three months as financial turmoil has sparked concern a recession could envelope the U.S. and Europe.
"Given the stresses and strains in the international financial system, the market is fearful of a severe international slowdown, especially in the developed countries," Moore said.
World stock markets recovered somewhat Tuesday but still had a ways to go to make up for steep plunges the day before on growing investor anxiety that the U.S. debt crisis is enveloping Europe. Germany announced a bailout package Sunday totaling $69 billion for Hypo Real Estate, the country's second-biggest commercial property lender. Ireland, Iceland, Denmark and Greece moved quickly to guarantee bank deposits to ease consumer anxiety.
Investors are looking for signs that the Organization of Petroleum Exporting Countries may cut production if prices fall further. Iranian Oil Minister Gholam Hossien Nozari on Saturday called on fellow OPEC members not to pump too much oil in a bid to keep prices above $100.
However, OPEC may be reluctant to slash output since higher gasoline and heating costs would be a further drag on economic growth, Moore said.
"I think it's very difficult for OPEC," Moore said. "With the international economy looking weak, decisions to support oil prices have to be balanced against not making the situation worse."
A stronger dollar has also been weighing on oil prices. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but sell crude as the U.S. currency strengthens.
The 15-nation euro bought $1.3577 in early trading Tuesday, up from the $1.3457 late Monday in New York but still at lows not seen this year.
Some price support might be expected from the approach of the Western hemisphere winter season, but demand might be weaker than usual this time. Citing a forecast from the U.S. National Oceanic and Atmospheric Administration, Vienna's JBC Energy noted that "winter temperatures should be above normal."
In other Nymex trading, heating oil futures spiked more than 6 cents to $2.5378 a gallon, while gasoline prices rose nearly 6 cents to $2.1175 a gallon. Natural gas for November delivery rose nearly 13 cents to $6.964 per 1,000 cubic feet.
In London, November Brent crude rose $2.17 to $85.85 a barrel on the ICE Futures exchange.