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 Brent crude, the global benchmark, had risen 55 cents to $38.47 a
barrel by 1253 GMT, having touched an intra-day high of $38.95. U.S.
crude <CLc1> was up 31 cents at $36.62.
"It's technical buying. It's pretty obvious shorts started to take
profit when Brent prices dropped down to the 2008 low," said Tamas
Varga, oil analyst at London-based PVM Associates.
The dollar was also near a seven-week low against a basket of
currencies, encouraging the purchase of dollar-denominated oil
contracts.
In the United States, now the world's biggest oil producer,
congressional leaders inched closer on Monday to agreeing to repeal
a 40-year old U.S. oil export ban.
If the United States started exporting large volumes of excess oil
it would alleviate pressure on its swelling storage tanks.
"We read any lifting of the U.S. export ban as a significant
structural change ... Lifting the ban could help to clear US crude
oil stocks," said Olivier Jakob, an analyst at consultant
Petromatrix.
OPEC Secretary General, Abdullah al-Badri, said on Tuesday that
current low oil prices would not continue and may rise in a few
months or a year.
Nevertheless, bearish sentiment remained strong with prices hovering
around 7-year lows. An OPEC decision to abandon setting a production
ceiling for the oil cartel, as well as a likely rise in Iranian oil
exports after sanctions are lifted, fueled a 16 percent sell-off
since the OPEC meeting on Dec. 4.
Credit ratings agency Moody's said on Tuesday it had lowered its
2016 Brent crude oil estimate to $43 a barrel from $53 on the
outlook for prolonged oversupply as additional production from Iran
would offset any slowdown in U.S. output.
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With OPEC pumping strongly and U.S. drillers producing large amounts
of crude, the Brent/WTI premium has shrunk 28 percent in one week to
$1.95 per barrel.
Oil markets usually see strong demand toward the end of the year as
the northern hemisphere enters its peak winter heating demand
season. Yet an unusually mild start to winter, in part due to the El
Nino weather phenomenon, has limited demand.
Also looming is an expected increase in U.S. interest rates this
week. Crude typically falls when the U.S. currency strengthens
because it becomes more expensive for buyers paying in other
currencies.
(Additional reporting by Henning Gloystein in Singapore and Aaron
Sheldrick in Tokyo, editing by William Hardy and Louise Heavens)
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