Brent crude held above $116 on Friday ahead of a key US payrolls report, with the benchmark poised for its steepest weekly fall since December due to concerns over the health of the global economy and easing supply disruption fears.
The jobs data will help investors gauge the outlook for oil demand growth in the world's biggest economy amid renewed concerns the country's recovery may be faltering. Businesses outside the farm sector are expected to have added 170,000 jobs last month, according to a Reuters survey.
Brent crude gained 12 cents to $116.20 a barrel by 0216 GMT, after racking up a 3 percent loss in two straight sessions, its biggest two-day percentage loss since Feb 28. U.S. crude gained 13 cents to $102.67, after ending about 2.5 percent lower.
"We are seeing a slightly easing situation as far as the supply-demand balance is concerned against the backdrop of the global economic growth and OPEC production levels," said Ric Spooner, chief market analyst at CMC Markets. "There is a downside bias to oil prices."
Oil and commodities across the board plunged on Thursday, as a slower-than-expected growth in the U.S. services sector sparked a wave of selling that sent prices crashing through the key support levels. The 19-commodity Thomson Reuters-Jefferies CRB index fell nearly 1 percent, extending Wednesday's 1.3 percent drop.
Brent is poised to fall 3 percent, posting its steepest slide since the week ended Dec. 18, while U.S. oil is set to slide 2.1 percent, marking the biggest decline in a month.
Oil prices are also under pressure after industry data provider Genscape reported that crude inventories at the Cushing, Oklahoma, delivery point for U.S. futures hit a fresh record high on May 1.
"We are seeing a build up in inventories and that is weighing on prices," Spooner said.
Against worries of a slowing global economy and rising inventories, progress in talks over Iran's nuclear programme is easing fears among investors of a supply disruption from the Middle East.
The five permanent members of the U.N. Security Council said they expected talks with Tehran to lead to concrete steps toward a negotiated solution.
Iran and major powers resumed talks in mid-April in Istanbul after a gap of more than a year, with investors viewing the resumption as a chance to ease escalating tension and help to avert the threat of a new Middle East war. They are to meet again on May 23 in Baghdad.
"Things will change completely if there is a major supply disruption, but as of now the resumption in talks is helping ease those concerns," Spooner said.
"Brent has more to lose than U.S. prices because there was a bigger supply risk premium attached to Brent."
Brent will extend losses to $113.77 per barrel, as a preceding downtrend from the March 23 high of $127.06 has resumed, according to Reuters technical analyst Wang Tao.
U.S. oil will extend its Thursday loss to $101.82, a break below which will trigger a further loss to the April 10 low of $100.68, he added.