US crude rises 50 cents, settling at $63.51, rebounding along with stock market

  • Oil edged up on Tuesday, supported by a recovery in the equities market .
  • There was pressure coming from the physical market, where top exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in May.
  • One of the key price drivers going forward will be crude output from the U.S., which has risen by almost a quarter since mid-2016.
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Oil edged up on Tuesday, supported by a recovery in the equities market, but still struggled to shake off Monday's decline.

U.S. West Texas Intermediate futures finished Tuesday's session up 50 cents at $63.51 a barrel.

International benchmark Brent crude futures were last up 35 cents on the day at $67.99 a barrel by 2:13 p.m. ET. Brent rose last week to $71 a barrel, close to its highest so far this year, but failed to hold on to that level.

The oil price fell by about 3 percent on Monday, following a sharp sell-off on Wall Street as the tech sector came under fire.

"There's not really one catalyst for crude being up today," said John Macaluso, analyst at Tyche Capital Advisors. The gains were in part the result of a technical rebound from Monday's losses, as well as a recovery in the equities market, Macaluso said.

Wall Street's main indexes were higher on Tuesday as technology and consumer discretionary stocks recovered from Monday's sharp selloff. All 11 major S&P sectors were higher, and 29 of the 30 Dow components were up by midday.

Also lending support was Russian Energy Minister Alexander Novak's comments on Tuesday that a joint organization for cooperation between OPEC and non-OPEC countries may be set up once the current deal on oil output curbs expires at the end of this year.

However, there was pressure coming from the physical market, where top exporter Saudi Arabia is expected to cut prices for all the crude grades it sells to Asia in May, while output from Russia, the world's largest producer, hit an 11-month high.

An expected increase in U.S. crude inventories limited price gains.

U.S. crude inventories, widely viewed as a litmus test of the broader trend in global inventories, are expected to have risen by 1.7 million barrels in the week to March 30, according to a Reuters poll.

The American Petroleum Institute releases its weekly inventory data later on Tuesday and the U.S. government releases its figures on Wednesday.

"There is also an element of seasonality at play, said Walter Zimmerman, chief technical analyst at United-ICAP. "Yesterday was a little more dramatic than might typically be the case, but it's entirely in keeping with seasonal peaking risk that the month of April brings to crude oil," he said.

Also weighing on the market is speculative length, after money managers last week raised their bullish bets on crude.

"With excessive hedge fund positions still looming over the market, profit-taking should weigh on oil prices over the coming weeks," Julius Baer head of commodities and macro research Norbert Ruecker said.

Prices for physical barrels of oil in the North Sea are around their lowest since last June, as extensive refinery maintenance across the region eats into demand.

One of the key price drivers going forward will be fuel inventories and crude output from the United States, which has risen by almost a quarter since mid-2016 to 10.43 million bpd, overtaking Saudi Arabia's production and closing in on supply levels from Russia.

— CNBC's Tom DiChristopher contributed to this report.