U.S. West Texas Intermediate (WTI) crude futures for September delivery rose 38 cents, or 0.4%, to $96.80 a barrel by 0330 GMT, reversing losses from the previous session and on track for a nearly 3% rise for the week.
Brent crude futures for September settlement, due to expire on Friday, were flat at $107.14 a barrel. The more active October contract climbed 8 cents, or 0.1%, to $101.91.
"It certainly feels like we are back in trade-off mode again, where sentiment is shifting between recessionary risks in H2 and a fundamentally undersupplied market," said Stephen Innes, managing partner at SPI Asset Management.
A key driver will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, on Aug. 3.
Producers have now unwound the record 9.7 million barrels per day (bpd) supply cut they agreed in April 2020, when the COVID-19 pandemic slammed demand.
"Oil prices have little chance of (posting) deep losses on the back of a weak U.S. dollar and the ongoing supply crunch," said CMC Markets analyst Tina Teng.
OPEC+ sources said the group will consider keeping oil output unchanged for September, but two OPEC+ sources also told Reuters a modest increase would be discussed.
A decision not to raise output would disappoint the United States after U.S. President Joe Biden visited Saudi Arabia this month hoping to strike a deal on oil production.
A senior U.S. administration official said on Thursday the government was optimistic about the OPEC+ meeting, and said extra supply would help stabilise the market.
Analysts, however, said it would be difficult for OPEC+ to boost supply much given that many producers are struggling to meet their production quotas due to a lack of investment in oil fields.
"OPEC production is constrained, though supplies are stabilising in Libya and Ecuador. Under-investment in many member countries will keep production constrained," ANZ Research analysts said.
