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The
bounce came as a weaker dollar took the pressure off commodities
which tumbled on Monday, with a global commodities price index
sinking to a 12-year low.
By 0955 GMT, Brent crude was up 79 cents at $50.31and U.S. crude
gained 75 cents to $45.92. Brent fell to $49.36 at one point on
Monday, its lowest since Jan. 30.
"I think we will stabilize around current levels," said Olivier
Jakob, head of Swiss oil consultancy Petromatrix. "You can never
exclude a further correction, but I think we are in the last 5
dollars rather than the next 15 dollars."
Crude has come under pressure from mounting signs of ample
supply and a weakening of the demand outlook. Brent fell 18
percent in July, while U.S. crude's 21 percent decline was its
biggest monthly decline since the 2008 financial crisis.
Oil output from the Organization of the Petroleum Exporting
Countries (OPEC) reached the highest monthly level in recent
history in July, a Reuters survey found, and Iran's nuclear deal
with world powers has raised the prospect of even more oil
supply.
OPEC made a historic policy shift in November 2014, choosing to
defend market share against rising output from rival producers
rather than cut output to support prices. Since then, it has
boosted production by more than 1.7 million barrels per day
(bpd) - almost 6 percent.
"Given the 1.5 to 2.0 million-barrel-per-day oversupply
generated by OPEC the recovery will probably be short-lived,"
said Carsten Fritsch, analyst at Commerbank, referring to the
oil price recovery on Tuesday.
OPEC has been counting on higher demand in the second half of
2015 and next year to mop up excess supply, but signs of a
further slowing of China's economy have raised a question mark
about the strength of oil demand.
Other analysts also see a weak outlook for oil prices. BMI
Research said a strong dollar, China's weakening economy and the
prospect of rising Iranian oil exports would keep downward
pressure on the market.
"A retest of Brent crude's 2015 low around $45 per barrel looks
inevitable given current ample market supply and intensifying
bearish market sentiment towards prices," it said.
(Additional reporting by Henning Gloystein in Singapore; Editing
by Susan Fenton and William Hardy)
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