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Brent crude <LCOc1> was up 20 cents, or 0.5%, at $39.98 a barrel
by 1119 GMT after dropping more than 5% on Tuesday to fall below
$40 a barrel for the first time since June.
U.S. crude <CLc1> was up 42 cents, or 1.1%, at $37.18 a barrel,
having fallen nearly 8% in the previous session.
Both major oil benchmarks are trading close to three-month lows.
The global health crisis continues to flare with coronavirus
cases rising in India, Great Britain, Spain and several parts of
the United States.
The outbreaks are threatening to slow a global economic recovery
and reduce demand for fuels from aviation gas to diesel.
"Short-term oil market fundamentals look soft: the demand
recovery is fragile, inventories and spare capacity are high,
and refining margins are low," Morgan Stanley said.
Yet, the bank raised its Brent price forecast slightly higher to
$50 a barrel for the second half of 2021 with the dollar
weakening and rising inflation expectations, it said.
Record supply cuts by the Organization of the Petroleum
Exporting Countries and allies, known as OPEC+ have helped
support prices, but with grim economic figures being reported
almost daily, the outlook for demand for oil remains bleak.
China's factory gate prices fell for a seventh straight month in
August although at the slowest annual pace since March,
suggesting industries in the world's second-biggest economy
continued their recovery from the coronavirus-induced downturn.
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by
Elaine Hardcastle and Louise Heavens)
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