Oil prices rebounded in Asian trade on Tuesday as traders covered short positions after prices fell at least 3 per cent in the previous session, but gains were capped by worries about oversupply and the health of the global economy.
Brent crude for December delivery climbed 19 cents at $48.80 a barrel as of 0132 GMT after settling down $1.85, or 3.7 per cent, in the previous session.
US crude for November delivery rose 19 cents to $46.08 after closing down $1.37, or 3 percent. The November contract expires on Tuesday.
“Short-covering has led to a little bit of a rally,” said Ben Le Brun, market analyst at Sydney’s OptionsXpress.
Traders closing November positions ahead of the contract expiry for US crude could also be supporting prices, Le Brun said.
But worries over Iran boosting crude production when international sanctions are lifted and weaker economic growth in China, the world’s second-largest economy, weighed on markets, Le Brun said.
“The fundamentals remain a little bit stressed,” he added.
Iran plans to increase crude production by 500,000 barrels per day within a week of the lifting of sanctions, a senior Iranian oil official was quoted as saying on Monday, selling the oil to traditional customers in Asia and Europe.
China’s GDP growth slowed to 6.9 percent in the third quarter, down on a 7 percent rise in the prior quarter, while implied oil demand was also lower, official figures and Reuters data on Monday showed.
That came as US crude stocks likely rose for a fourth straight week, climbing last week by 3.7 million barrels to 472.3 million barrels, a preliminary Reuters survey taken ahead of weekly industry and official data showed on Monday.
Industry group, the American Petroleum Institute (API) will report its stocks data later on Tuesday, while the US Department of Energy’s Energy Information Administration (EIA) will release oil inventory data on Wednesday.
Investors are also keeping an eye on the outcome of an European Central Bank meeting and manufacturing data from China later this week to give direction to oil markets, Le Brun said.
Thursday’s ECB meeting, set against a background of lower consumer spending, could result in a further round of stimulus and asset purchases.