Oil prices edge up to above $101

New York's main oil contract, light sweet crude for delivery in May, won 20 cents to $101.06 per barrel.

London's Brent North Sea crude for May added 66 cents to $100.52 per barrel.

Despite the slender gains, traders remained downbeat about the outlook for prices, which had hit a record close of $112 at the start of last week.

Prices have since tumbled on profit-taking amid fears of lower demand for energy.

Many traders in Europe returned to work on Tuesday after a four-day Easter holiday weekend.

"Now that the long weekend is over, we could resume the previous downward trend on the dollar as the US economic outlook continues to remain bleak," Sucden analyst Michael Davies said Tuesday.

"This economic factor seems also to be catching up with oil, especially combined with another rise in crude stocks expected in tomorrow's EIA report."

The US government's Energy Information Administration will release its weekly snapshot of American crude inventories on Wednesday.

The update is a central focus for oil market participants because the United States is the biggest global consumer of energy, followed by number two China.

In recent days and weeks, prices hit lifetime high points on the back of massive fund demand, as investors sought shelter from choppy stock markets and the fading dollar.

New York crude had hit a record intra-day high of $111.80 on March 17, while London Brent scored an historic peak of $108.02 earlier this month.

The weak dollar boosts demand for dollar-priced commodities because it makes them more affordable for buyers using stronger currencies.

However, the US unit has recovered significantly after falling to an all-time low of 1.5905 dollars to the euro more than one week ago.

Traders said that the energy market was setting aside gyrations in the foreign exchange market to focus on supply and demand.

"The oil market has [finally] begun to focus upon fundamentals which point to slowing demand and adequate supply levels," said Bank of Ireland analyst Paul Harris.

"The next few sessions are likely to continue the retracement to more sustainable levels."

However, the plight of the dollar could still provide the oil market with a another shot in the arm, according to analysts at energy consultancy John Hall Associates.

"Any further weakening in the US dollar may well check any downward pressure on prices," they said in a note to clients.  (AFP)