United States crude prices edge up on short covering, but oversupply still bites

Internationally traded Brent was at $44.66 a barrel, up 19 cents. Baker Hughes said the number of US oil rigs increased slightly last week - the first rise in three months.

"Temperatures in Europe will see a significant drop over the weekend [and] European traders will start next week in winter mode", said Olivier Jakob from the Swiss-based analysts Petromatrix. The long-term oversupply concerns and global inventory could drag crude oil prices lower.

Benchmark West Texas Intermediate (WTI) crude for December delivery peaked at about $43.25 a barrel last week before sinking to just above $40 on Monday.

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US crude supplies are more than 100 million barrels above the five-year seasonal average

The dollar fell to a near one-week low against a basket of currencies .DXY , making crude and other commodities denominated in the greenback more affordable for holders of currencies, such as the euro.

The smaller-than-expected stockpiles growth convinced a few traders and investors to cover short positions in late trading, helping oil prices recover. During an interview with CNBC on Wednesday, Gene McGillian, analyst with Tradition Energy, said that he expects oil prices to fall next to $37.75 level.

OPEC's second-biggest producer, Iraq, has sold a few crude grades for as little as $30 a barrel, trade sources said, acting as a further drag on futures.

Crude prices pushed higher Monday after US-led coalition jets targeted the Islamic State group s oil operations in retaliation following the deadly attacks on Paris. That's part of a deliberate strategy by the main exporters, which are aiming to protect their market share and damage the previously booming U.S. oil industry.

Saudi Arabia raised its oil exports in September by 113,000 barrels per day (bpd) to 7.111 million bpd from 6.998 million bpd in the previous month, official data showed on Wednesday. "We all know the next level below (that) is the Great Recession low of around $32 [for oil prices]", McGillian told CNBC.The prediction comes on news that domestic crude inventories increased last week, albeit below the forecasted build among analysts. But this requires a price curve in which oil is sufficiently more expensive in the future than for immediate delivery - a market structure known as contango - so that holding costs can be covered. "But as emphasis returns to the oversupply in oil, the market is giving back those gains".

Copper prices have fallen to their lowest in more than six years in a sell-off triggered by the attacks in Paris, a stronger dollar and poor demand prospects in top consumer China.