A proposal by Venezuela President Hugo Chavez to try to broker a peace deal in Libya briefly pushed oil lower on Thursday, while recently risk-averse stock markets put in gains.
Wall Street looked set to open higher and shares in Europe and Asia gained as the oil price eased and on upbeat U.S. economic data overnight.
European markets, however, were also poised for the European Central Bank to sharpen its anti-inflation line, raising the likelihood it will raise interest rates later this year.
Brent crude oil fell as low as $113.09 a barrel but was later back up above $115 on reports of continued fighting in Libya, including air strikes against rebel positions.
World stocks as measured by MSCI were up 0.4%.
The sharpest moves in oil were prompted by Chavez, a good friend of Libyan leader Muammar Gaddafi, suggesting a commission from Latin America, Europe and the Middle East could be formed to try to reach a negotiated outcome to the Libyan crisis, which has driven oil prices to levels that may threaten global economic recovery.
Arab League Secretary-General Amr Moussa said his group was considering the proposal.Some oil analysts suggested that the proposal was a convenient excuse for traders to adjust their positions.
"If it's coming out of Chavez, it might not have a great degree of substance," said Tim Riddell, head of technical analysis at ANZ in Singapore.
"The fact that the markets have been so volatile and without having concrete evidence of any material shift in the unrest in the Arab world suggests to me that we are at best consolidating."
Financial markets have nonetheless become highly sensitive to the turmoil in North Africa and the Middle East because of the broad impact that a rising oil price has on everything from corporate profits to consumer confidence and interest rate projections.