Crude oil futures rose by 2.55 per cent to Rs 3,734 per barrel Thursday after participants widened their bets, tracking a firm trend overseas.
Brent crude was trading at $56.91, up 68 cents or 1.2 per cent, at 1141 GMT on Thursday.
"Assuming there is no recession, oil demand should continue to see robust growth", Commerzbank said in a note.
Oil advanced for the first time this week after Saudi Arabia signaled it's taking steps to stabilize the market, which has been rocked by the escalating U.S.
Elsewhere, data indicating a larger-than-expected drop in U.S. crude stocks offered some support to oil prices after several weeks of large draws on inventories.
The oil-price recovery from seven-month lows fizzled out just below the 53 handle, as the sellers returned amid an ongoing recovery in the Treasury yields that usually diminishes the attractiveness of oil as an alternative higher-yielding asset. The benchmark global crude traded at a premium of $4.80 to WTI for the same month.
Saudi Arabia plans to keep its crude oil exports below 7 million barrels per day in August and September despite strong demand from customers, to help drain global oil inventories and bring the market back to balance, a Saudi oil official said. Growth in global oil demand is slowing and won't exceed 650,000 bpd in 2019, according to Vitol Group, the world's largest independent oil trader.
In a statement, ANZ Bank said that crude and oil prices felt the pinch as traders dealt with the effects of the US-China economic discord.
The Saudi efforts to tighten the market, however, have been hampered by weakening demand growth and the USA shale production growth.
Vitol's Chief Executive Officer Russell Hardy said in a Bloomberg TV interview that oil markets are focused on the trade war, while "slightly under-pricing" the risk of supply disruptions in the Persian Gulf.
The minister said the OPEC and non-OPEC ministerial monitoring committee would meet in Abu Dhabi on 12 September to review the oil market.
The U.S. has put a series of tariffs on Chinese trade goods and China has responded by letting its currency drop, increasing uncertainty for businesses and exporters around the world.