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"Oil
is catching its breath a bit and seeing if markets have been
oversold or not," Capital Economics commodities economist Thomas
Pugh said.
Brent was up 20 cents at $43.41 a barrel by 1115 GMT, and U.S.
crude was up 15 cents at $39.46 a barrel.
Oil has lost a third of its value since June on high U.S.
production, record crude pumping in the Middle East and concern
about falling demand in Asian economies.
On Monday, both crude oil benchmarks saw their lowest trades
since early 2009, dropping as much as 6 percent in one session
after heavy falls in equity markets.
"The trend remains down, but in an erratic phase where attempts
to recover are being made," PVM Oil Associates director Robin
Bieber said.
China has cut interest rates and lowered the reserves banks must
hold and injected 140 billion yuan into banks through short-term
liquidity operations to calm fears about a severe economic
slowdown. The Shanghai Composite Index <.SSEC>, is now 43
percent below the June peak for the year.
ANZ said China's rate cuts had calmed commodity markets, but
they remained cautious and gains would be limited as global oil
oversupply is likely to persist in the short term.
Pugh at Capital Economics said he thought the oil market was
"already pricing in a worst case scenario in China at the
moment", adding: "I’d be surprised if we drop much further."
But physical oil traders say the physical market remains
stubbornly weak, with the global crude oil glut proving
difficult to clear.
Several members of the Organization of the Petroleum Exporting
Countries are producing record volumes of oil.
OPEC member Iran plans to increase crude production and reclaim
its lost export share after international sanctions are lifted,
and Nigeria is also boosting exports.
U.S. crude stocks fell by 7.3 million barrels last week to 449.3
million as refinery runs increased, compared with analysts'
expectations for a rise of 1 million barrels, industry data from
the American Petroleum Institute showed on Tuesday.
U.S. government oil stockpiles data are due later on Wednesday
from the Energy Information Administration.
(Additional reporting by Meeyoung Cho in Seoul and Henning
Gloystein in Singapore; Editing by Christopher Johnson)
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