Oil prices were flat on Tuesday, bouncing back from an early slide as the dollar fell to a one-week low, which encouraged buying of dollar-denominated crude at session lows.
Global benchmark Brent futures hit a two-month low early, but by 2:02 p.m. EST (1902 GMT), Brent rose 11 cents to $62.70 a barrel. U.S. West Texas Intermediate crude futures were down 9 cents at $59.20 a barrel.
The U.S. dollar hit a one-week low, which can attract investors to oil by making crude cheaper for buyers using other currencies.
“We have chipped away at crude losses today, and you could easily say it’s a function of a weak dollar,” said Bob Yawger, director of energy futures at Mizuho.
Since the stock market began falling sharply early this month, oil prices have wiped away the year’s gains amid a volatile stock market.
“There are a lot of people who are praying that last week’s collapse in crude…was some anomaly, and that as soon as the stock market recovered, the crude market would recover with it,” said Walter Zimmerman, chief technical analyst at United-ICAP.
“So far its looking a little ominous but WTI has not broken down,” Zimmerman said, adding the contract would have to decline more to enter a bear market.
Paris-based International Energy Agency said global oil supply would outstrip demand this year, prompting fears that efforts to reduce inventories would fall short of expectations.
“We’ve been under pressure…it’s all been a function of the IEA report,” said Yawger.
The IEA revised its global demand forecast upward by 7.7 percent. Still, rising production, particularly from the United States may outweigh demand gains. The United States overtook Saudi Arabia last week to become the second-largest global producer.
U.S. oil production is expected to surpass 11 million barrels per day in late 2018, a year earlier than projected last month, the U.S. Energy Information Administration said last week.
Seasonality may also be affecting prices, analysts said.
“A driving force behind the next few weeks of pricing vulnerability stems from the current peak in U.S. refinery maintenance season,” Michael Tran, commodity strategist at RBC Capital Markets, wrote in a research note.
The private American Petroleum Institute is due to publish crude inventory estimates on Tuesday.