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Oil bounces back but gains limited

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Oil prices rebounded in Asia on Monday but stayed below US$45 a barrel as gains were limited by a strong dollar and data showing a decline in Chinese crude imports.

[SINGAPORE] Oil prices rebounded in Asia on Monday but stayed below US$45 a barrel as gains were limited by a strong dollar and data showing a decline in Chinese crude imports.

US benchmark West Texas Intermediate was trading 35 US cents higher at US$44.64 and Brent crude was up 38 US cents at US$47.80 a barrel at around 0245 GMT.

A bullish US jobs market report last week sent the dollar higher, which would make dollar-priced oil more expensive for holders of weaker currencies, hurting demand and prices.

The US government released a surprisingly strong October jobs report that showed the US economy still growing at a firm rate, with the unemployment rate falling to 5.0 per cent on the back of 271,000 new jobs created, nearly double the number in September.

"That led to strong gains of the dollar on expectations for an increase in the interest rate by the Federal Reserve in their next meeting scheduled in December," said Sanjeev Gupta, head of the Asia Pacific oil and gas practice at professional services firm EY.

A hike in interest rates encourages investors back to US assets for higher returns, pushing the dollar higher.

Data showing that crude imports from China, the world's second-biggest oil consumer, fell to the lowest level in five months is also helping keep a lid on prices in the face of a world supply glut.

China's crude imports fell to about 6.23 million barrels a day in October, Bloomberg News reported quoting data from the Beijing-based General Administration of Customs.

"With few signs of change in the short-term supply and demand fundamentals, crude oil prices are likely to remain range-bound in the coming weeks," Mr Gupta said.

Oil prices have fallen by more than half since reaching peaks of over US$100 a barrel in June last year due to an oversupply of the commodity and weak demand.

AFP