Light, sweet crude for December delivery rose $1.68 to $64.90 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract fell 93 cents to close at $63.22 overnight, the lowest settlement since May 29, 2007.
Key Asian stock markets rebounded sharply Tuesday, including Japan's Nikkei 225 index, up 6.4% and Hong Kong's Hang Seng index, jumping 14.4% -- its biggest gain in 11 years.
"It was crude reacting to the Nikkei," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "It began with a turnaround in Asian markets."
European stock markets also opened higher, with Germany's DAX up 7.34% and Britain's FTSE 100 rising 2.28%.
Oil investors have been taking a cue from a plunge in global stock markets that suggests major economies are headed for a significant recession over the next 12 months. Oil prices have fallen 58% since reaching a record $147.27 on July 11.
The Dow Jones industrial average fell 2.4% Monday after credit ratings agency Moody's Investors Service downgraded General Motors Corp.'s (GM, Fortune 500) credit rating further into "junk" status, citing a sharp contraction of the U.S. auto market. The Standard & Poor's 500 index fell 3.2%.
"It's quite a severe slowdown that's been priced in already," Kornafel said. "If the credit market remains tight and the recession worsens, we could certainly go into the $50s and even below $50, but that would be an overshoot to the downside."
"Further support for the bears" is likely to come from Wednesday's U.S. inventory data which is expected to show a fifth consecutive increase in crude oil stocks, by 1.2 million barrels a day, according to analysts at JBC Energy in Vienna, Austria.
Prices have fallen despite a production quota cut of 1.5 million barrels a day by the Organization of Petroleum Exporting Countries last week. OPEC officials have said the group, which controls about 40% of global crude oil production, may cut output again at a meeting in December.
"It doesn't matter what OPEC does or other supply news, people are just so focused on demand and getting their money out of trades that no longer make money," Kornafel said. "There's no real attention being paid to fundamentals in the short-term. It's still the panic."
In other Nymex trading, gasoline futures rose 0.91 cent to $1.49 a gallon and heating oil gained 2.25 cents to $1.94 a gallon. Natural gas for November delivery fell 1.6 cents to $6.11 per 1,000 cubic feet.
In London, December Brent crude rose 48 cents to $61.89 a barrel on the ICE Futures exchange.
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