Oil traded mixed on Wednesday, as Wall Street equities rebounded from early losses to trade flat, and Brent crude futures premium over West Texas Intermediate crude briefly above $20.00 a barrel due to an unexpected rise in U.S. crude oil inventories.
Oil's gains were modest, and sentiment was dented earlier in the day after Germany denied the euro was overvalued.
"I think what we've got here is a situation once again where crude oil is going to be backed up, because we'll be producing more than we're refining," said Phil Flynn, analyst at Price Futures Group in Chicago, after the release of weekly inventory numbers that showed high levels of U.S. crude.
"At the moment, we continue to follow the financials. The market seems very sensitive to the economic factors and they remain the primary driver," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
The European Central Bank is expected to keep interest rates at a record low of 0.75 percent when it meets on Thursday, but the focus will be on whether policymakers are worried a strong euro could hurt recovery in troubled economies such as Spain.
Brent was up 36 cents to $116.88 a barrel. Gains were not enough to match the previous day's session high, the highest point since mid-September.
U.S. crude fell two cents, or 0.02 percent, to settle at $96.62 a barrel, having traded from $95.04 to $96.99.
Crude stocks were up 2.62 million barrels last week, according to the Energy Information Administration's (EIA) weekly inventory report.
Gasoline stocks rose 1.74 million barrels and distillate stocks were off 1.04 million barrels, the EIA said.
"It is definitely a negative report and bearish for crude oil as supplies continue to go higher," said Flynn.
Saudi Arabia, the world's largest oil exporter, kept crude oil production steady at 9.05 million barrels per day (bpd) in January, from 9.025 million bpd in December, an industry source said.
Economic data released this week suggested the euro zone economy had turned a corner, with strong Markit Eurozone Composite PMI data, based on business activity. But worries persisted about political conflict in Italy and Spain.
Investors will watch for the ECB's meeting on Thursday and China's trade numbers on Friday for more clues on the health of the global economy and what it may mean for commodities demand.