Analysts expect the global market to stay oversupplied through the first half of the year

Smoke rises from the port of the eastern Libyan city of Benghazi on Saturday during clashes between forces loyal to the internationally recognized government and Islamist militias. 

Smoke rises from the port of the eastern Libyan city of Benghazi on Saturday during clashes between forces loyal to the internationally recognized government and Islamist militias.  Photo:  Agence France-Presse/Getty Images 
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By Nicole Friedman And Georgi Kantchev

 
NEW YORK—Oil prices gained Tuesday, reversing earlier losses, as traders weighed concerns about Iraqi and Libyan production against an oversupplied market.

Light, sweet crude for March delivery settled up 75 cents, or 1.4%, at $53.53 a barrel on the New York Mercantile Exchange, the highest settlement since Dec. 30.

Brent, the global benchmark, rose $1.13, or 1.8%, to $62.53 a barrel on ICE Futures Europe.

Oil prices have plunged since June as ample global supply growth outweighed tepid demand, and many analysts expect the market to stay oversupplied through the first half of the year. However, recent violence and bad weather has affected output from Libya and Iraq, two major oil producers.

In Iraq, one of the biggest Middle Eastern oil producers, bad weather has hit crude exports. As a result, oil exports from the south of Iraq totaled 1.5 million barrels a day in the first 10 days of February, which is 900,000 barrels a day lower than in January, and less than half of the country’s target for this month,  Commerzbank  said in a note.

In the U.S., traders remained focused on a growing glut of oil. Stockpiles have risen for five straight weeks to a record high of 417.9 million barrels as of Feb. 6, according to weekly data from the U.S. Energy Information Administration dating back to 1982.

In Cushing, Okla., a key storage hub and the delivery point for the Nymex contract, supplies have climbed for 10 straight weeks.

“The U.S. is absorbing the bulk of the surplus,” said Christopher Main, analyst at Citigroup Inc. “All the crude has basically wound up in the U.S. market.”

Demand for U.S. crude typically falls in the early spring as refiners shut units for seasonal maintenance.

The Nymex crude-oil options contracts for March expired at settlement Tuesday, adding further volatility to the day’s price moves as traders closed out positions, analysts said.

Gasoline futures fell 3.61 cents, or 2.2%, to $1.5901 a gallon. Diesel futures gained 0.60 cent, or 0.3%, to $1.9774 a gallon, the highest settlement since Dec. 23.

Write to Nicole Friedman at nicole.friedman@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

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