U.S. crude oil prices rebounded on Tuesday after two straight sessions of losses as technical investors bought in the market and the euro pared some losses against the dollar.
The euro trimmed losses after hitting fresh four-month low, as Italian government vowed to fast-track austerity measures and its 12-month bond sold to strong demand, giving investors hopes that the third largest economy in Europe could manage its own debt problems.
Also supporting oil, the U.S. Energy Information Administration said on Tuesday that it expects oil demand to increase 1.6 percent this year to a record 88.16 million barrels per day due to still robust demand in emerging economies.
Meanwhile, some investors bought in the market after two days of sell-off, which had pushed the spread between WTI and Brent to a new record of 22 dollars.
Oil further advanced in the late trading after the minutes from the latest Federal Reserve policy meeting showed Fed officials debated the possibility of a third round of quantitative easing, which is positive to equities and commodities.
Light, sweet crude for August delivery jumped 2.28 dollars, or 2.4 percent to settle at 97.43 dollars a barrel on the New York Mercantile Exchange.
In London, Brent crude for August delivery gained 51 cents, or 0.44 percent to close at 117.75 dollars a barrel.
