There was some relief that Bank of America Corp will receive $20 billion fresh cash from the U.S. government and a guarantee for $118 billion of potential losses on toxic assets, but worries over credit losses at big banks continue.

U.S. light crude for February delivery was up 20 cents at $35.60 a barrel by 0830 GMT (3:30 a.m. EST), after a $1.88 fall the previous session. The contract, which expires on Tuesday, touched a low of $33.20 on Thursday, the weakest in nearly a month.

London Brent crude for the new front-month March contract was up 32 cents at $48.00, maintaining an unusual premium to the U.S. benchmark due to the recent disruption of Russian gas supplies to Europe and growing U.S. stockpiles.

The price of oil for delivery in the next few weeks has fallen about 13 percent so far this week, as a string of dismal figures from major economies stung investor confidence and signaled further weakness in oil demand in months ahead.

"The facts remain that global oil demand is still reducing at an alarming rate and, whilst OPEC is making an effort to adhere to quotas, the clear picture shows that another cut is required and soon," said Rob Laughlin, senior oil analyst at MF Global in London.

The gloomy global economic outlook has prompted OPEC to forecast a fall of 180,000 barrels per day (bpd) in world oil demand this year.

The producer group, which has already cut 4.2 million bpd in supply from the world market since September, could quickly deepen output cuts if needed, OPEC President Botelho de Vasconcelos said on Thursday.

Investors will be keenly watching U.S. CPI data, due later on Friday, which is expected to show a drop of 0.9 percent in December, while a preliminary index of January consumer sentiment in January is expected to erode to 59.0 from 60.1 in December.

They are also nervously awaiting earnings results from Bank of America and Citigroup later on Friday, with both expected to post more losses.

The financial crisis, which first surfaced in the United States over housing loan defaults, is forcing a growing number of major economies into recession. Energy consumption has waned sharply, prompting oil prices to tumble by more than $110 since a record peak in July.

Analysts said the glut in global crude supplies would continue to cap oil prices for the rest of this year.

"With between one-half and one day of global demand on the water in floating storage, OPEC would have to tighten the market by one-half to 1 million bpd below current demand levels for an entire quarter to get rid of the surplus," JP Morgan said in a research note led by Lawrence Eagles.

(Reporting by Christopher Johnson in London and Fayen Wong in Perth; editing by Peter Blackburn)