Crude prices rose on Tuesday after the International Energy Agency noted a sharp drop in oil investment. But the broader picture of an oversupplied market limited any gains as traders focused on inventory data due later in the day.
Brent crude, the global benchmark, was up 35 cents at $47.43 a barrel by 2:32 p.m. EDT, after falling for four trading days in a row. U.S. crude settled up 34 cent, or 0.78 percent, at $44.21 a barrel, snapping a four-day losing streak.
Prices rallied to session highs in mid-morning U.S. trade, which one trader attributed to the U.S. National Hurricane Center's forecast that tropical storm Kate will become a hurricane by tonight. It said the storm is expected to pass north of Bermuda and remain well offshore the U.S. East Coast.
Other market players said the move was driven by technical trading in U.S. crude.
In its World Energy Outlook, the IEA also estimated that investment in oil would decline more than 20 percent this year and the trend would continue into 2016.
Oil majors have canceled 80 projects across the world this year because of low oil prices and cut capital spending by as much as $22 billion, BP's head of exploration and production Lamar Mckay said.
It added oil was unlikely to return to $80 a barrel before the end of the decade, despite the cuts in investment, as annual demand growth struggles to top 1 million barrels per day.
Teddy Sloup, senior market analyst at iitrader.com LLC in Chicago, said traders on Tuesday had been targeting a technical level $43.50 a barrel and when U.S. crude failed to break lower the market bounced, although it would likely struggle to hold gains.
"If the stock market is able to sell off from now until the end of the week you have to believe crude is going after the early October low (of $42.58)," Sloup said. "Supply is not going anywhere, there's tons out there and the market feels heavy."
The American Petroleum Institute will release its crude inventory data later on Tuesday at 4:30 p.m. ET (2130 GMT) and any build could push prices lower. U.S. crude inventories are forecast to build for a seventh straight week.
The official U.S. Energy Information Administration inventory data will be delayed until Thursday because of the U.S. Veterans Day holiday on Wednesday.
"It has been the weekly (U.S.) inventory report that has been driving the market for the past three weeks," said Ole Hansen, Saxo Bank head of commodities research.
Oil majors expect that the global oil glut is likely to take longer than expected to clear and may depress crude prices for many more months if not years despite steep investment cuts and project cancellations around the world.
Still, comments from OPEC Secretary-General Abdullah al-Badri on the outlook for oil did provide a little bullish relief for the market.
"We are following the market day in and day out, month in and month out we see that 2016 is really producing some positive results," Badri said in Abu Dhabi.
OPEC holds its next policy-setting meeting on Dec. 4 and is widely expected to continue with its no-cut policy initiated in November last year.