Oil bounces back from two-month lows on weaker dollar
(Reuters) Crude futures bounced back Tuesday from two-month lows, helped by a weaker dollar, but an oil inventory glut and a drop in bullish bets by investors weighed on prices.
Brent crude was up $1.29 at $47.54 per barrel. US West Texas Intermediate crude was up $1.10 at $45.86 per barrel.
OPEC cut its forecast for world economic growth this year citing increased uncertainty following Britain's vote to leave the EU, and in its first 2017 forecast said the pace of oil demand growth would slip.
OPEC lowered its 2016 global economic growth forecast to 3.0% from 3.1%.
"Today's rally, due in large part to the equity market, isn't really supported by the fundamentals," head of commodity strategy at ING Hamza Khan said.
Saudi Energy Minister Khalid al-Falih said on Tuesday the oil industry needed a price above $50 per barrel to sustain investment but added that downward pressure would prevail because of an inventory glut.
OPEC was upbeat about 2017 being the year when excess oil inventories will fall.
Oil prices fell to a two-month low on Monday on renewed fears of oversupply.
On Tuesday, commodity and stock prices rose as the dollar index dropped 0.4%. The British pound bounced back from a 31-year low amid easing political tensions in Britain and as hopes for stimulus measures boosted risk appetite.
China's top oil firm, CNPC, said it saw the country's oil consumption rising to 670 M tons by 2027 from 520 M in 2014, implying annual growth of just 2%.
"Oil prices could rally each time macro sentiment recovers on expectations of yet another round of quantitative easing, but for now the path of least resistance seems to be lower in the near term," analyst Virendra Chauhan of Energy Aspects told the Reuters Global Oil Forum.
Energy Aspects cut its third-quarter Brent forecast to $52 from $55 per barrel.
Reporting by Dmitry Zhdannikov; Additional reporting by Ahmad Ghaddar, Henning Gloystein and Christopher Johnson; editing by Dale Hudson and Jason Neely
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