Oil rose toward $55 a barrel on Thursday, recovering from part of the previous session's slide after China took steps to pour liquidity into the world's second-biggest economy, although traders and analysts said oil's outlook looked weak.

Crude snapped a four-day winning streak on Wednesday, when the U.S. government said crude inventories increased by 6.3 million barrels, rising for a fourth consecutive week to hit a record high.

The market gained support on Thursday from optimism that steps by China's central bank to pour in fresh liquidity would spur demand for energy in the second-largest oil consumer after the United States.

Brent crude LCOc1 rose 83 cents to $54.99 a barrel by 1016 GMT (05:16 a.m. EST), having fallen more than a dollar intra-day earlier and settling 5.5 percent lower on Wednesday. U.S. crude CLc1 added 60 cents to $49.05.

"It will be some time yet before we see any sustained trend reversal in oil prices," said Carsten Fritsch, analyst at Commerzbank. "There's no basis for a sustained recovery at the moment."

The market remains highly volatile. Oil began to rise last week from near-six-year lows, in part due to a downturn in U.S. rig activity that could eventually dampen rapid growth in shale oil production, only to tumble on Wednesday.

Other participants said it was too soon to expect a sustained price rise.

"I think prices will consolidate around these sorts of levels before moving lower," said Christopher Bellew, a senior broker at Jefferies Bache. "It takes a lot of time for fewer rigs to translate into lower oil production."

Source: www.reuters.com

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