Oil prices edged up for a second day on Wednesday, recovering from a drop below $50 a barrel, after weekly data showed a fall in U.S. crude inventories, while a stronger dollar tempered gains.
The dollar rose to its highest in over three months after a voting member of the U.S. Federal Reserve’s policy-setting committee expressed support for an interest rate hike in September.
A stronger dollar tends to undermine crude oil by making it more profitable for non-U.S. investors to sell it.
Growing oversupply, slowing demand from China and the prospect of crude flooding onto the market from Iran after Tehran’s deal with the West over its nuclear program have knocked 21 percent off the oil price this quarter.
“All the negative news we’ve had in the last few weeks and months, starting with the nuclear deal with Iran, through to economic weakness in China and the strength of the dollar have all added up and, at least in our view, this (sell-off) was overdone,” said Commerzbank strategist Eugen Weinberg.