Crude futures bounced back from two-month lows on Tuesday, helped by a weaker dollar, but an oil stocks overhang and a drop in bullish bets by investors weighed on prices.
Brent crude was at $47.36 per barrel at 1022 GMT, up $1.11 or 2.3 percent. U.S. West Texas Intermediate crude was up 87 cents at $45.63 a barrel.
Saudi Energy Minister Khalid al-Falih said on Tuesday the oil industry needed a price above $50 per barrel to sustain investments but added that downward pressure would prevail because of an inventory glut.
“We need a price higher than $50 to achieve balance in oil markets in the long term,” Falih told German business daily Handelsblatt.
“But there are still excess stocks on the market – hundreds of millions of barrels of surplus oil. It will take a long time to reduce this inventory overhang,” he added.
Oil prices fell to a two-month low on Monday on renewed fears of oversupply.
On Tuesday, commodity and stock prices rose as the dollar index dropped 0.4 percent. The UK pound bounced back from a 31-year low amid easing political tensions in Britain and as hopes for stimulus measures boosted risk appetite.
A brief suspension of tanker loading in Iraq and conflicting reports of new attacks in Nigeria also bolstered prices.
China’s top oil firm CNPC said it saw the country’s oil consumption rising to 670 million tons by 2027 from 520 million in 2014, implying annual growth of just 2 percent.
Hedge funds cutting their exposure to oil prices have also contributed to bearish sentiment, resulting in a 12 percent fall in Brent prices from their June peak above $52 per barrel.
“Oil prices could rally each time macro sentiment recovers on expectations of yet another round of quantitative easing, but for now the path of least resistance seems to be lower in the near term,” analyst Virendra Chauhan of Energy Aspects told the Reuters Global Oil Forum.
Energy Aspects cut its third-quarter Brent forecast to $52 from $55 a barrel.
Physical markets were weak, with Asian refiners processing less crude as they grapple with margins that plunged to five-year lows as refined products flooded the region.