Brent crude briefly rose above $97 a barrel on Tuesday, after a survey showed China's factory activity unexpectedly picked up in September, yet wide fears of a global supply glut contained its advance.
The HSBC/Markit Flash China Purchasing Managers' Index (PMI) rose to 50.5 in September from 50.2 in August, beating analysts' expectations for a reading of 50, as orders increased.
Brent for November delivery was flat near $97 a barrel, after falling by more than a dollar on Monday. U.S. crude extended gains to rise 90 cents to near $92 a barrel, rebounding from a session low of $90.58 that was its weakest since Sept. 11.
The PMI survey also showed that a factory employment index slumped to a 5-1/2-year low. Finance Minister Lou Jiwei said at the weekend he would not dramatically alter policy because of any one economic indicator, cooling any speculation of swift, aggressive action to boost growth.
Keeping oil price gains in check are persistent concerns over a well-supplied market that had pushed Brent down by more than 5 percent so far in September, with the oil benchmark on track for a third straight monthly fall.
But Saudi Oil Minister Ali al-Naimi on Monday appeared to downplay worries about the impact of sinking crude oil prices, which had fuelled recent speculation that the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil output which would be its first formal production cut since the 2008 financial crisis. OPEC members, many of whom need oil prices above $100 a barrel to meet budgetary needs, will review oil output policy at a meeting on Nov. 27.