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The
dollar rose to its highest in over three months after a voting
member of the U.S. Federal Reserve's policy-setting committee
expressed support for an interest rate hike in September.
A stronger dollar tends to undermine crude oil by making it more
profitable for non-U.S. investors to sell it.
Growing oversupply, slowing demand from China and the prospect
of crude flooding onto the market from Iran after Tehran's deal
with the West over its nuclear program have knocked 21 percent
off the oil price this quarter.
"All the negative news we’ve had in the last few weeks and
months, starting with the nuclear deal with Iran, through to
economic weakness in China and the strength of the dollar have
all added up and, at least in our view, this (sell-off) was
overdone," said Commerzbank strategist Eugen Weinberg.
"When prices are oversold, a rebound becomes more likely."
September Brent crude futures rose 46 cents to $50.45 a barrel
by 1045 GMT (0645 EDT) after gaining 1 percent on Tuesday, up
from a six-month low on Monday.
U.S. crude for September delivery gained 32 cents to trade at
$46.06, up from Monday's four-month low.
Adding a layer of support to the price was evidence of further
declines in U.S. crude inventory levels.
U.S. crude inventories fell by 2.4 million barrels last week to
459.7 million, the American Petroleum Institute (API) said late
on Tuesday, compared with analysts' expectations for a decrease
of 1.5 million barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub fell by
504,000 barrels, API said. [API/S]
Still, inventories are up from 387.3 million at the end of 2014
and in July OPEC pumped at record rates while the U.S. rig count
rose for the first time this year.
The U.S. Energy Information Administration (EIA) publishes its
figures on Wednesday at 10.30 a.m. EDT (1430 GMT).
"In Brent we trace a first support at the low yesterday ($49.36
$/bbl) followed by 49.00 $/bbl and 48.00 $/bbl. The low of
January is at 45.19 $/bbl. First resistance at 50.00 $/bbl
followed by 51.00 $/bbl and 51.70 $/bbl," Petromatrix analysts
wrote in a note.
(Additional reporting by Florence Tan in Singapore; editing by
William Hardy)
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