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Oil prices rebounded in Asia today following steep losses in the previous session, but analysts said gains were capped by a strong dollar and persistent concerns about a global supply glut.
US benchmark West Texas Intermediate (WTI) for July climbed 47 cents to $58.46 while Brent crude for July delivery gained 46 cents to $64.48 in late-morning trade.
Both contracts fell sharply yesterday on worries about the crude oversupply and as the greenback soared against other major currencies, making dollar-priced oil more expensive and denting demand.
The dollar strengthened against the euro after a European Central Bank official said the bank would ramp up its asset-purchase stimulus programme in May and June to offset an expected financial market slowdown in the coming months.
A robust report on US housing construction also lifted the greenback.
"The strengthening of the dollar... Was the reason for the three percent decline in crude prices yesterday," said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
"The subsequent rebound we see today is due to bargain-hunting and the market forces readjusting to normal trading."
The US Department of Energy is expected to report stockpiles fell by two million barrels in the week ending May 15, according to Bloomberg News. They still remain near their highest levels on record, however.
"Although stockpiles are expected to fall, the crude production level in the US is still on a high side and we expect it to rise further," said Ang.
