Crude oil prices edge up, but oversupply, strong dollar drag

A strong US dollar is seen as a drag on commodity markets as it makes imports for other countries more expensive

Crude oil prices edged up on Friday after falling more than 2% the previous session, with analysts saying oversupply and a strong dollar would continue to weigh on fuel markets.

US crude futures were trading at $45.46 a barrel at 0433 GMT, up 26 cents from their last settlement, while Brent crude rose 27 cents to $48.25 a barrel, but the gains followed steep falls the previous day on the back of climbing US crude inventories.

Analysts said that oversupply would pressure oil markets.

"We have seen few signs recently indicating a change of tack in the oil markets," said French investment bank Natixis.

"Oil prices will remain under pressure as long as the surplus remains in the market," the bank added, referring to global production being 1-2 million barrels per day above demand.

The strong US dollar is also seen as a drag on commodity markets as it makes imports for countries with other currencies more expensive.

The greenback has gained almost 5% against a basket of other leading currencies since early October as markets expect the US Federal Reserve to be the first major central bank to raise interest rates since the global financial crisis of 2008/2009.

"Rising speculation that the Fed will raise rates will put further downward pressure on commodity prices," ANZ Bank said on Friday, adding that it expected US crude futures to fall by 3% in the coming three months due to cost reductions by US producers.

"We expect that US shale producers continued to lower production costs in the September quarter, and likely used the October rally in WTI to add significant hedging cover to production volumes," the bank said.