Brent oil closed up on Tuesday for the first time in four days, supported by a weaker dollar and short-covering after its recent losing streak, while U.S. crude fell again on bets that inventories had hit record highs for a 10th straight week.
Traders and investors believe crude stockpiles in the United States rose by 3.8 million barrels last week to nearly 453 million, the biggest in at least 80 years, a Reuters poll showed.
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The American Petroleum Institute (API), an industry group, will issue its weekly inventory report at 4:30 p.m. EDT (2030 GMT), ahead of Wednesday's official data from the U.S. Energy Information Administration (EIA).
Prices were down most of the day, before a late rebound in Brent.
Rising output in Libya, and Iran's wish to export more oil once it clinches a nuclear deal that would remove Western sanctions, added to the pressure.
"All indications are there's too much oil in the United States, and it's growing, and that should drive prices lower," said Sal Umek at the Energy Management Institute in New York.
Even so, the downside in oil was limited by a weaker dollar to the euro that made commodities denominated in the greenback more appealing to holders of the single currency.
Also, with Brent having lost more than 7 percent in three earlier sessions, some market bears wanted to close out their shorts and take profit.
More short-covering could take occur in post-settlement trade and Wednesday's market "particularly if the API numbers surprise to the upside," Umek said.
Market participants view API's number as a precursor to the EIA data, though the two have often diverged.
Brent's new front-month May contract finished the session at $53.51 a barrel, up 7 cents from the close of $53.44 for the April contract, which expired on Tuesday.
U.S. crude settled at $43.46, down 42 cents. Technical charts show brittle support for U.S. crude at above $40, suggesting it could fall to between $37 and $32.
News that a refinery in Port Arthur, Texas, had begun the start up process for a unit under maintenance helped U.S. crude pare some losses. Run by Motiva, the refinery has a capacity to handle 600,250 barrels of crude per day.
Adding to the day's volatility was position squaring ahead of options expiry in U.S. crude, which resulted in "a little crazy action," said Tariq Zahir, managing partner at Tyche Capital Advisors in Laurel Hollow in New York.
(By Barani Krishnan; Additional reporting by Libby George in London and Keith Wallis and Henning Gloystein in Singapore; Editing by William Hardy, Diane Craft and Meredith Mazzilli)