Oil rose by more than $1 a barrel on Tuesday, boosted by a weaker dollar, but gains were capped as anxieties about excess supplies continued to swirl.
Brent crude, the global benchmark, increased $1.11 a barrel to $46.95 while US marker West Texas Intermediate was up by 96 cents a barrel to $44.35 a barrel. Oil was supported by a falling US dollar.
Commodities such as crude which are priced in dollars become cheaper for holders of other currencies. Crude prices have spent most of June sliding lower as traders questioned the effectiveness of Opec-led cuts in reducing global stockpiles in the face of rising production from the US.
“Oversupply jitters continue to cast a shadow over the oil market and though selling pressures have taken a breather, bullish catalysts remain in short supply and the near-term risks are still stacked to the downside,” said Stephen
Brennock at London-based broker PVM. “The light at the end of the tunnel for beleaguered bulls is still pretty dim.” Hedge funds have slashed their bullish bets in Brent.
Short positions — a key indicator of bearish sentiment — jumped to the highest level on record to the equivalent of almost 169m barrels of crude last week.
