Oil futures rose on Tuesday as an interruption in Iraqi crude loadings at Basra threatened to tighten supplies, but prices held close to two-month lows hit in the previous session as investors continued to slash their bullish bets.
Brent crude oil futures were trading at $46.39 per barrel at 0320 GMT, up 14 cents from their last close but still near the Friday's low of $45.90. U.S. West Texas Intermediate (WTI) crude was up 11 cents at $44.87 a barrel.
Traders said the rise in prices was largely a result of a suspension of tanker loading of Basra Light crude at two export terminals in Iraq's south after a pipeline leak.
Although loadings reportedly resumed overnight, Iraq plans to cut crude oil exports from its southern ports to 2.79 million barrels per day (bpd) in August from 2.99 million bpd planned for July, a preliminary loading program showed.
Oil price gains have, however, been limited with financial players betting on price falls, or shorting the crude market, moving away from long positions that benefit from price rises.
Hedge funds and other money managers cut their bullish bets on crude by 22 million barrels over the seven days ending on July 5. These players have cut their net long positions in crude futures and options by almost a quarter, from 633 million barrels to 485 million, over the last four weeks.
"Oil prices continued their period of weakness as investors remained concerned that increasing exploration activity in the U.S. would see U.S. production and inventories remain high," ANZ bank said on Tuesday. "Signs of an end to several supply disruptions and a stronger U.S.-dollar also played their part in keeping sentiment bearish."
Physical markets were also weak, with Asian oil refiners processing less crude as they grapple with margins that plunged to five-year lows after the region was flooded with supply of refined products and as slowing economic growth hits demand for fuels.