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Oil up after five-year low in Brent; traders wary of more downside

A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. REUTERS/Eric Gaillard

By Barani Krishnan

NEW YORK (Reuters) - Brent prices ended higher on Tuesday after a 5-year low and five straight days of losses and U.S. crude also rose as players sought a sustainable price for oil in a market haunted by oversupply concerns.

Sentiment in oil was aided somewhat by a weaker dollar that boosted the value of commodities denominated in the currency, traders said. [FRX/]

Lower capital expenditure for next year planned by oil companies such as ConocoPhillips also helped as they indicated less drilling and production.

But fear of a further slide after a 40 percent drop in Brent's value since June kept market bulls away, analysts said.

Worries about the impact of lower oil prices on the global economy weighed on Wall Street stocks, capping the rebound in crude as well.

"We're just treading water if you ask me," Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, said, referring to Tuesday's higher oil prices.

"There's this idea again that we may have over-extended to the downside and that's why you're seeing some short covering coming in as people try to find a bottom to the six-month slide we've seen now."

Brent settled up 65 cents, or 1 percent, at $66.84 a barrel. Earlier in the session, it fell as low as $65.29, its weakest since September 2009. On Monday alone, Brent lost $2.88, or 4.2 percent, for its third-largest one-day loss this year.

U.S. crude finished up 77 cents at $63.82 a barrel, after swinging between a high of $64.20 and low of $62.25. It fell $2.79, or 4.2 percent, on Monday.

Supply and demand will determine oil prices in coming months, an oil official from the United Arab Emirates said on Tuesday, the latest sign that Gulf members in the Organization of the Petroleum Exporting Countries were ready to weather lower prices after deciding to not cut output last month.

The tumble in Brent and U.S. crude futures has been exacerbated by price cuts made by Saudi Arabia and Iraq to exports to the United States and Asia as the largest producers in OPEC tried to compete for market share.

New U.S. projections show oil production from the big three U.S. shale plays should grow by more than 100,000 barrels per day by January, although many shale companies were starting to make deep cuts to spending for next year.

(Additional reporting by David Sheppard in London and Adam Rose in Beijing; Editing by Michael Urquhart, Chizu Nomiyama and Richard Chang)