Brent crude futures were up 2 cents to $77.71 a barrel by 0945 GMT, and U.S. West Texas Intermediate crude was up 5 cents at $73.04.
Supply cuts by top exporters Saudi Arabia and Russia set for August helped to lift the benchmark prices, which were also supported as the U.S. dollar fell to a two-month low.
A weaker dollar makes crude cheaper for holders of other currencies and often boosts oil demand.
“Oil has found a floor and the only thing … that could break that is if U.S. inflation is scorching hot and the Fed is forced to tighten this economy into a recession,” said Edward Moya, an analyst at OANDA.
Markets are awaiting U.S. inflation data on Wednesday to see if price pressures are continuing to moderate, which could provide clues on the interest rate outlook.
While central bank officials said the U.S. Federal Reserve will likely raise interest rates further to tame inflation, markets are somewhat pacified by indications that the months of monetary policy tightening are nearing an end.
“Nevertheless, nerves are not completely calmed just yet. Anxiety is still palpable that recession fears could lead to downgrades in oil demand,” said PVM analyst Tamas Varga.
Still, the International Energy Agency (IEA) is standing firm with the expectation that oil demand from China and developing countries, combined with recently announced supply cuts, is likely to keep the market tight in the second half of the year despite a sluggish global economy, its head said on Monday.
China’s decision to boost support for its real estate sector bolstered the hope for an uptick in demand there, analysts said.
Seperately on Tuesday, several sources told Reuters that top buyer China once again requested less supply from the world’s biggest oil exporter, Saudi Aramco.
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