"The fundamentals dictate that prices should be lower, but market bulls and bottom pickers continue to discount bearish news and embrace anything that's even remotely bullish," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
A deteriorating security situation led Libya's state oil company to declare force majeure on 11 of its oilfields on Wednesday. Output from Libya is at about a quarter of highs seen before the country's 2011 civil war.
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In Iraq, Islamic State militants set fire to oil wells in the Ajil field east of Tikrit to try to hinder aerial attacks aimed at driving them from the oilfield.
Those bullish factors ran contrary to the spike in the dollar and the U.S. decision to press ahead with its nuclear negotiations with Tehran.
The dollar jumped to 11½ year lows against the euro after European Central Bank chief Mario Draghi left the door open for asset purchases beyond September 2016. A stronger dollar is regarded a negative for oil as it weakens demand for crude from buyers holding other currencies.
U.S. Secretary of State John Kerry said a nuclear deal with Tehran would address security concerns of Gulf Arab countries, although Washington was not seeking a "grand bargain" with Iran, a reference to wider political and security cooperation.
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On Monday, oil tumbled, with Brent falling 5 percent, on fear that a quick nuclear deal for Tehran could lift U.S. and other Western government sanctions against the OPEC nation and flood the market with new oil exports.
Weaker-than-expected U.S. jobless claims and factory orders and a drop in nonfarm productivity were other negatives for oil.