Light, sweet crude for March delivery rose 9 cents to $64.77 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract dropped $1.88 to settle at $64.68 a barrel on Thursday.
March Brent futures rose 18 cents to US63.06 a barrel on London's ICE Futures exchange.
The market kept watch on a meeting by the International Atomic Energy Agency's board, which was deciding whether to refer Iran, OPEC's second-largest oil producer, to the U.N. Security Council over concerns that it may be seeking to make nuclear weapons.
The IAEA meeting adjourned Thursday without reaching consensus on referring Iran. IAEA officials said they would urge the U.N. body not to take any action against Iran until March.
American officials made similar conciliatory statements that appeared to underscore a desire to seek a diplomatic solution with Iran over its nuclear program. American ambassador to the IAEA, Gregory Schulte, said the U.S. isn't immediately seeking sanctions or other punitive measures against Iran.
This abated fears in the energy markets, which broke below a key technical barrier at around $65 a barrel of crude oil.
"The $65-a-barrel mark is a very, very important level for support," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
"Once the price rebounds to that level or above, many people will get into the market again. But for now if nothing happens they will probably wait because the market's volatility is huge," he said.
The U.N. Security Council could impose sanctions if the agency reports Iran. Even though Iran's oil minister Kazem Vaziri Hamaneh has said Iran won't link the country's oil exports to its nuclear dispute, analysts say tensions over the issue would prevent any sharp decline in crude futures.
"In the future, we have to be very careful that at any time Iran could take their oil exports" as a bargaining chip in the standoff, Emori said. "This places a high risk premium on the price of oil."
In other Nymex prices, heating oil rose 0.72 cent to $1.7780 a gallon while gasoline rose 0.42 cent to $1.6698 a gallon. Natural gas inched down 0.7 cent to $8.345 per 1,000 cubic feet.
Oil Prices Fall As Supply Fears Abate: Financial News - Yahoo! Finance
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