By Joe Brock
LONDON (Reuters) - Oil reversed earlier losses and climbed above $37 a barrel Tuesday in volatile trade.
Earlier in the session, crude had fallen more than $3 after Russian gas company Gazprom resumed pumping gas into Ukraine on its way to Europe. This meant there would no longer be an increased need for oil products to replace gas.
U.S. light crude for February delivery was up 18 cents at $36.69 a barrel by 9:42 a.m. EST, having previously hit a new 2009 low of $32.70. There was no official settlement Monday due to a U.S. holiday.
The March contract, which takes over as front month on Wednesday, was down 31 cents at $42.26, and was nearly $6 a barrel above the February contract due to brimming crude stocks at Cushing, Oklahoma, the delivery point for NYMEX contracts.
London Brent crude rose 28 cents to $44.78 a barrel, having closed $2.07 lower Monday.
Oil was pressured earlier as economic uncertainty deepened after the Royal Bank of Scotland posted the biggest loss in British corporate history, with stock markets in Asia following European counterparts lower and Japan's Nikkei index closing down 2.31 percent.
U.S. markets were closed Monday for the Martin Luther King holiday and trade was thin, especially on the front-month February contract.
Oil prices have fallen by more than three quarters since record highs above $147 a barrel hit last July, as financial turmoil has evolved into a global economic crisis and weakened demand.
Two recent supportive factors have been removed, after Russia and Ukraine signed their 10-year gas deal and a ceasefire between Israel and Hamas in Gaza eased fears of disruption to supply.
China, once a driver of the surge in oil prices, is expected to release this week fourth-quarter GDP data that economists say will show a 7.0 percent growth, much higher than in the developed world, but the slowest pace of expansion for world's third-biggest economy in nearly a decade.
(Editing by Anthony Barker)
