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Brent crude futures for March rose 72 cents to $55.47 a barrel
by 1152 GMT after slipping 35 cents in the previous session.
"The perception that any retracement will be quick as confidence
in economic and oil demand recovery is unlikely to fade away,"
said PVM analysts in a note.
U.S. West Texas Intermediate crude was at $52.65 a barrel, up 29
cents. There was no settlement on Monday as U.S. markets were
closed for a public holiday. Front-month February WTI futures
expire on Wednesday.
Investors are upbeat about demand in China, the world's top
crude oil importer, after data released on Monday showed its
refinery output rose 3% to a new record in 2020.
China also avoided an economic contraction last year.
Investors are watching out for U.S. oil inventory data from the
industry association API, due on Wednesday, the same day U.S.
President-elect Biden's inauguration speech will likely give
details on the country's $1.9 trillion aid package.
The International Energy Agency cut its outlook for oil demand
in 2021, but pointed to a recovery in demand in the second half
of the year to an annual average of 96.6 million barrels per
day.
"Border closures, social distancing measures and
shutdowns...will continue to constrain fuel demand until
vaccines are more widely distributed, most likely only by the
second half of the year," it said in its monthly report.
(Additional reporting by Florence Tan, editing by Louise
Heavens)
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