Crude oil prices jumped as much as 2 percent on Tuesday, shrugging off big drops in Japan’s stock market and eroding some of the previous session’s losses that were driven by festering concerns about global oversupply.
U.S. crude was up 49 cents at $30.18 a barrel at 0259 GMT, after rising as far as $30.30. The contract fell about 4 percent on Monday, finishing at $29.69.
Global crude benchmark Brent was up 35 cents at $33.23 a barrel. It settled the previous session down $1.18 at $33.88.
Prices on Monday were hit by a drop in U.S. equity markets amid persistent fears about the global economic slowdown.
But on Tuesday, oil market traders ignored a 5-percent drop in Japan’s Nikkei. Many Asian markets are closed for Lunar New Year holidays.
“Once again we have got a weaker U.S. dollar and I suspect that that’s where the bulk of the support is coming from,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
The U.S. dollar fell against the Japanese yen as sentiment towards most risk assets turned bearish amid concerns about banking stability.
A declining dollar makes oil prices cheaper because most trade is denominated in the greenback, potentially spurring demand.
Still, the glut in world oil markets is unlikely to abate soon, with a Reuters survey showing U.S. crude stocks likely rose by 3.9 million barrels in the week ended Feb. 5.
Industry group American Petroleum Institute on Tuesday releases its weekly inventory reports followed by official numbers from the U.S. government’s Energy Information Administration on Wednesday.
“The fundamentals haven’t shifted. The market remains in surplus and while that’s the case, it is very difficult for prices to sustain any gains,” McCarthy said.
There is also little sign of any coordination among big producers outside the United States after weekend talks between OPEC members Saudi Arabia and Venezuela on possible coordination yielded little.
That dims prospects of any initiative on curbing supply to boost prices including producers like Russia, analysts say.
“Hopes of a coordinated supply cut from OPEC and non-OPEC members continue to fade,” ANZ said in a research note on Tuesday.