Oil edges up on short-covering

Singapore - Oil prices inched up in Asian trade on Friday as wary traders bought up cheap crude to recoup some of their losses after the previous day's plunge, analysts said.

New York's main contract, light sweet crude for delivery in August, gained 33 cents to $78.53 a barrel in the afternoon, up from $78.20 in New York, its lowest level since the beginning of October.

Brent North Sea crude for August delivery advanced 65c to $89.88 after tumbling to $89.23 in late Thursday trade, dipping below the $90 line for the first time since December 2010.

"We're seeing a small bounce for now. There is potential for a little bit of short-covering given the big moves last night," Jason Hughes, head of premium client management at IG Markets Singapore said.

But he said the market outlook remained grim following disappointing numbers from China and Europe.

Preliminary data from banking giant HSBC on Thursday showed China's manufacturing activity hit a seven-month low in June, while a separate survey showed eurozone private sector activity sank to the lowest level for three years in the second quarter.