Oil gave up early gains with Brent futures slipping below $48 on Tuesday as a stronger dollar weighed, offsetting comments from producer group OPEC that prices may have found a floor.
The Secretary-General of the Organization of the Petroleum Exporting Countries, Abdullah al-Badri, said oil prices may have bottomed out and warned of a risk of a future jump to $200 a barrel if investment in new supplies was too low.
"Crude oil markets continue to consolidate near term," ANZ analysts said, adding that Brent traded in the range of $48-$50 last week and showed little direction.
"OPEC's Secretary General commented yesterday that prices may have bottomed, but there was no imminent prospect of OPEC producers sitting down to discuss cutbacks until mid-year."
Brent fell 20 cents to $47.96 a barrel by 0700 GMT, after climbing to $48.38 earlier. It settled down 1.3 percent on Monday.
U.S. West Texas Intermediate (WTI) crude was down 17 cents at $44.98 a barrel after slipping to a session low of $44.35 on Monday, close to a near 6-year low.
Oil prices turned negative after the dollar index strengthened, making the dollar-denominated commodity more expensive for holders of other currencies.
Trading volumes are likely to be limited later on Tuesday as a snow storm is expected to disrupt transport in New York.
Oil prices have dropped nearly 60 percent since peaking in June 2014 on ample global supplies from the U.S. shale oil boom and a decision by OPEC to keep its production quotas unchanged.
Standard Chartered said OPEC's decision to keep production high was beginning to impact other producers.
"Non-OPEC output is being hit hard, and we now expect the oil market to tip into supply deficit in H2," the bank said.
Traders said there were other signs of a potential market pick-up.
"I'm not sure if prices have bottomed out, but I can see some signs for prices to rebound," said Yusuke Seta, a commodity sales manager at Newedge Japan, referring to a rise in Brent's open interests in the past few weeks.
Brent's open interest on the Intercontinental Exchange (ICE) hit 1.69 million lots in the week of Jan. 20, a record high since the data started in 2011.
Open interest is the number of contracts outstanding on a futures trading platform such as ICE.
However, WTI may come under pressure this week as commercial crude stockpiles likely rose nearly 4 million barrels last week, a Reuters survey showed, after posting its largest build in 14 years in the previous week. [EIA/S]