Internationally traded Brent futures were at $44.77 a barrel, up 16 cents.
"There is a real risk that we could see lower prices," said Ric Spooner, chief market analyst at Sydney`s CMC Markets. "The prospects for demand-growth are not large enough to go into the supply overhang."
China`s economy showed renewed signs of weakness, with its manufacturing falling to a three-year low, an official survey showed on Tuesday. Although Japan`s manufacturing accelerated, it was at low levels.[S7N0Z802A]
In physical markets, Dubai crude fell to the lowest since December 2008, averaging $41.691 per barrel for November, according to price-reporting agency Platts.
OPEC`s policy meeting on Friday is not expected to change the organization`s strategy, adopted last year, of pumping oil vigorously to protect its market share against U.S. shale drillers and other producers.
ANZ said on Tuesday it expected to see Saudi Arabia, OPEC`s biggest producer, keep oil production steady in the face of declining prices.
WTI crude could fall through $40 per barrel in coming weeks if crude oil stocks do not decline in line with seasonal patterns, the bank said.
Financial traders are acting accordingly, with hedge funds` bullish wagers on U.S. crude falling to a more than five-year low amid concerns that a drop in U.S. oil output was not enough to offset a global supply glut.
U.S. government data showed no meaningful decline in shale output despite falling rig counts, adding to a glut that is seeing 0.7-2.5 million barrels per day produced beyond demand.
Oil traders are closely watching a European Central Bank policy meeting this Thursday.
"If we saw selling of the dollar and buying of the euro, it could support the oil prices and give us a bit of a rally," said CMC Markets` Spooner.
A weaker dollar is a positive for oil prices as it makes greenback-denominated contracts cheaper for those holding other currencies.
The dollar dipped slightly on Tuesday after nearing a 13-year high against a basket of currencies.
"It`s really a bit of an ECB wild card at the moment," Spooner said.
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