London: Oil reversed early losses of almost 3 per cent yesterday after a dip below the psychological $70 (Dh257) a barrel level brought out bargain hunters, despite signs of weakness in the US recovery and warnings on Hungary's debt.

Benchmark US crude prices fell by as much as 2.8 per cent, touching a low of $69.51 a barrel in Asian trade and taking losses since Thursday to more than $5, before the market rallied to trade down just 11 cents at $71.40 by 1113 GMT yesterday.

Prices have declined by almost one fifth since hitting a 19-month high above $87 a barrel in early May.

ICE Brent crude for July rose 26 cents to $72.35.

Markets were roiled in Asian trading as investors rushed to catch up with a late Friday sell-off on Wall Street following disappointing US employment figures and comments from senior officials in Hungary's ruling party suggesting the country was heading for a Greek-style debt crisis.

"Asia was weak overnight with both stock and metal markets getting hammered," said Sucden Financial trader Rob Montefusco.

"It's recovered quite well as the euro's firmed off its lows — oil is mainly trading off the broader economic sentiment for the moment."

"There are lingering concerns about the European fiscal problems and also of course the weak US jobs numbers on Friday also added to the gloom," said Toby Hassall, chief commodities analyst at CWA Global Markets Pty Ltd in Sydney. "In addition to that, the strengthening US dollar is also adding pressure as well. It's a multitude of negative influences out there that are currently pressuring oil prices."

A stronger dollar makes oil imports more expensive for European buyers. Equity markets in Europe slipped yesterday, but a near 3 per cent bounce in BP's shares helped steady markets.

BP shares rose after the company said it was capturing most of the oil gushing from its leaking Gulf of Mexico well, and that an additional capture system would be ready for mid-June. Oil prices were also supported by the start of the Atlantic hurricane season this week — which the top US government weather agency has warned could be the most intense since 2005.

"We suspect that improving US demand and the advent of the hurricane season should prevent protracted declines below $68 support from taking hold," MF Global analysts Edward Meir said.