The world oil market see-sawed this week as traders tracked growing investor risk appetite, fluctuations in the dollar and stubborn supply glut worries.
"Oil prices are continuing their rollercoaster ride," wrote Commerzbank analysts in an oil research note.
Crude futures began on the back foot on Monday, sliding as an increase in US drilling activity and a strong dollar reversed gains from last week's better-than-forecast US jobs report.
A strong greenback makes dollar-priced commodities like oil more expensive for those using other currencies. That tends to weigh on demand and price levels.
Oil then rebounded Tuesday as OPEC forecast an easing of the global oversupply that has weighed on the market in recent years.
Traders bid up crude oil after Monday's rout, in what some analysts said was due partly to a technical correction.
Sentiment also brightened on speculation over possible global central bank stimulus measures following Britain's recent referendum vote to leave the European Union.
In its July report, the Organization of the Petroleum Exporting Countries said it expected the global supply glut to ease further this year and in 2017 on falling production by non-OPEC producers.
The 14-member cartel, which provides about one-third of the world's crude, has squeezed competitors by keeping the taps open.
It reported that its June production rose by 264,000 barrels per day to an average 32.9 million barrels per day.
OPEC predicted global demand growth would pick up in 2017.
The market then sank Wednesday as official US data showed a smaller-than-expected decline in crude stockpiles. That compounded fears that abundant global supplies might not be easing as quickly as expected.
Prices also took a tumble after the International Energy Agency warned that "the existence of very high oil stocks is a threat to the recent stability of oil prices".
Over the past month, oil has fluctuated between USD44 and USD 52 per barrel, after hitting near 13-year lows below USD 30 in February on the back of high supplies.
Yesterday, oil rose in tandem with a rally on global equity markets as rising risk appetite and a weaker dollar buoyed demand.
Prices then faltered today on resurgent worries over a supply glut and weak demand, with some analysts forecasting crude prices could fall to USD 40 a barrel.
IG Markets analyst Bernard Aw agreed that oversupply was the central factor.
"Oil prices are being dragged lower on renewed oversupply concerns," Aw said.
