Oil rose almost $1 on Tuesday, recovering some of the previous session’s losses with the help of gains in global stocks, a slightly weaker dollar and an outage hurting Libyan production.
Benchmark Brent LCOc1 was up 90 cents on the day at $60.87 a barrel at 1418 GMT, having fallen 3 percent the day before. U.S. light crude CLc1 gained $1.07 to trade at $52.07.
“The dollar is a bit weaker, but other than that, I don’t see any reason why this market should rally right now. It fell quite hard yesterday, so it might correct higher,” PVM Oil Associates Tamas Varga said.
Global stocks have fallen by more than 5 percent so far this month on worries about the impact of a U.S. trade dispute with China on economic growth. Any slowdown would hurt oil demand. But Tuesday’s modest share recovery eased some pressure on oil.
Tuesday’s dip in the U.S. dollar also offered some respite. A weaker dollar makes crude cheaper for holders of other currencies. A 5 percent rise in the dollar against a basket of currencies so far in 2018 has been putting pressure on oil.
A further boost came from a shutdown in production in Libya, where the National Oil Company (NOC) declared force majeure on Monday on exports from the El Sharara oilfield, the country’s biggest, which was seized last weekend by a militia group.
NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield.
To shore up oil prices which have tumbled by 30 percent since a peak above $86 in October, the Organization of the Petroleum Exporting Countries, Russia and their allies agreed last week to cut output by a joint 1.2 million bpd from January.
Russia said on Tuesday it planned to cut its oil output by 50,000 to 60,000 bpd in January, as gradually building to an agreed cut of 220,000 bpd.
But analysts said the cut may not be enough to restore balance to the market.
“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
Money managers have cut bullish holdings of Brent and WTI crude futures and options to the lowest level in three years.