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Brent crude futures were up 2 cents to $77.71 a barrel by 0945
GMT, and U.S. West Texas Intermediate crude was up 5 cents at
$73.04.
Supply cuts by top exporters Saudi Arabia and Russia set for
August helped to lift the benchmark prices, which were also
supported as the U.S. dollar fell to a two-month low.
A weaker dollar makes crude cheaper for holders of other
currencies and often boosts oil demand.
"Oil has found a floor and the only thing ... that could break
that is if U.S. inflation is scorching hot and the Fed is forced
to tighten this economy into a recession," said Edward Moya, an
analyst at OANDA.
Markets are awaiting U.S. inflation data on Wednesday to see if
price pressures are continuing to moderate, which could provide
clues on the interest rate outlook.
While central bank officials said the U.S. Federal Reserve will
likely raise interest rates further to tame inflation, markets
are somewhat pacified by indications that the months of monetary
policy tightening are nearing an end.
"Nevertheless, nerves are not completely calmed just yet.
Anxiety is still palpable that recession fears could lead to
downgrades in oil demand," said PVM analyst Tamas Varga.
Still, the International Energy Agency (IEA) is standing firm
with the expectation that oil demand from China and developing
countries, combined with recently announced supply cuts, is
likely to keep the market tight in the second half of the year
despite a sluggish global economy, its head said on Monday.
China's decision to boost support for its real estate sector
bolstered the hope for an uptick in demand there, analysts said.
Separately on Tuesday, several sources told Reuters that top
buyer China once again requested less supply from the world's
biggest oil exporter, Saudi Aramco.
(Reporting by Natalie Grover in London; Additional reporting by
Arathy Somasekhar and Sudarshan Varadhan; editing by Tom Hogue
and Jason Neely)
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