On Tuesday, Oil prices recovered from over three month low, boosted by a drop in the greenback, however, worries of ongoing glut influence on markets and many traders are raising their bets on additional price drops.
International Brent crude oil futures were trading at $44.93 per barrel at 0501 GMT, increase 21 cents from their last close. U.S. West Texas Intermediate crude was at $43.23, increase 10 cents per barrel.
Brent reaches its lowest level since May the prior day, although West Texas Intermediate reaches its lowest level since April.
Traders stated the higher prices were relatively a correction following the prior day's sharp drops, and on Tuesday, also revealed a more than 1% drop in the greenback against the Japanese yen.
As oil is traded in dollars, a decline in its worth makes fuel imports cheaper for countries using other currencies, possibly stimulating demand.
In spite of the slightly higher oil prices, analysts stated the general mood in oil markets had turned bearish.
"Ongoing fears of oversupply are encouraging hedge funds to liquidate their recent record bullish position; at the same time, we are also seeing a corresponding increase in speculative short positions," said Matt Smith of U.S.-based ClipperData in a note.
Hedge funds selling crude futures and options to close out these bullish positions have put downhill pressure on oil prices in current weeks.
Currently, the liquidation of old long positions, which profit from increasing prices, is being substituted by the establishment of short positions, which make money out of lower prices, as fund managers try to benefit from the plunging cycle in prices.
Hedge funds and other money managers reduce their net long position in Brent and West Texas Intermediate futures and selections by 31 million barrels to 453 million in the week ending on July 19.
The money managers short positions in West Texas Intermediate increase to 141,237 contract in the week to July 19, increase from 53,377 deal for the week to May 31.
In the same period of time, short positions in ICE Brent held by money managers move up to 78,351 contracts from 33,111.
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