Oil prices rose 2 percent on Tuesday to rebound from two-months lows on a technical correction, a dollar weakened by rising risk in global markets and bets that U.S. crude stockpiles fell for an eighth straight week.
Some investors and analysts said gasoline and diesel were in oversupply despite summer driving demand in the United States and that could pressure the broader petroleum complex again.
Saudi Arabia’s energy minister also there were hundreds of millions of barrels of surplus crude oil in the global market, although a price above $50 a barrel was required to ensure continued investment in the space.
Oil producing group OPEC said it was optimistic of seeing balance in supply-demand next year even as it lowered its expectations for 2016 global growth due to the uncertainties caused by Britain’s exit from the European Union.
Brent crude futures were up $1.14, or 2.5 percent, at $47.39 per barrel by 10:43 p.m. EDT (1443 GMT).
U.S. crude’s West Texas Intermediate futures rose 97 cents, or 2.1 percent, to $45.73.
A rally in global equity markets weighed on safe havens, including the dollar, pushing it down 0.2 percent. A weaker dollar makes greenback-denominated oil more attractive to holders of the euro and other currencies.
Oil prices hit two-month lows on Monday, with Brent sliding to $45.90 and WTI $44.42.
“This certainly appears to be a technical correction. My call was for WTI to test $44.35 and we had almost gotten there,” said Troy Vincent, analyst at New York-based energy data provider Clipperdata. “Also, I think the market is hesitant to move nearer to $40 support so quickly in the middle of summer.”
A Reuters poll forecast U.S. crude stockpiles fell 3.3 million barrels last week, declining for an eighth week in a row.
The American Petroleum Institute (API), a trade group, will issue its own stockpiles report at 4:30 p.m. EDT (2030 GMT) before official inventory data on Wednesday from the U.S. government’s Energy Information Administration (EIA).
The EIA will separately issue a short-term energy outlook (STEO) for July at around noon (1600 GMT) on Tuesday.
Oil prices tumbled last week after the EIA reported disappointing drawdowns in U.S. crude and gasoline inventories that pointed at weak demand.
A rising U.S. oil drilling rig count and cuts in bullish hedge fund bets on crude to four-month lows have also pressured prices.
(Additional reporting by Dmitry Zhdannikov, Ahmad Ghaddar and Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by Jason Neely and Marguerita Choy)