Oil Jumps Above $40 on Gaza Conflict

But any recovery could have its limits.

Oil prices have fallen 73% since peaking at $147.27 a barrel on July 11 as a credit crisis in the U.S. sparked a steep drop-off in consumer demand and corporate earnings. And analysts expect more dismal economic news from the fourth quarter over the next few weeks.

"More bad profit reports, jobs reports, housing results will put pressure on prices," Rigby said. "Once Obama comes in, that might start changing sentiment and generate more optimism." Barack Obama is scheduled to be sworn in as U.S. president on Jan. 20.

Trading volumes have been low as many traders take off the week between Christmas and New Year's Day.

In other Nymex trading, gasoline futures gained more than 6 cents to 90 cents a gallon. Heating oil rose by close to 7 cents to fetch $1.31 a gallon, while natural gas for January delivery jumped 23 cents to $6.06 per 1,000 cubic feet.

In London, February Brent crude rose $1.84 to $40.21 a barrel on the ICE Futures exchange.

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Associated Press writer Alex Kennedy contributed to this article from Singapore.