By Kevin Baxter 

Oil prices edged higher Tuesday amid lower trading volumes as the August price rally lost momentum, with crude hovering around $47-$50 a barrel.

The October contract for global benchmark Brent was up 0.35% at $49.43 a barrel, while U.S. counterpart West Texas Intermediate was up 0.4% at $47.17 a barrel.

Monday's bank holiday in the U.K. cut into trading volumes for both benchmarks. A similar holiday taking place this weekend in the U.S. means that some observers expect the markets to remain stagnant until next week.

"Technical momentum is stalling and there are no obvious signs out there that suggest prices will change that much in the next week," Olivier Jakob from the Switzerland-based Petromatrix said.

Mr. Jakob added that the August rally had been driven by short covering, a market term for buying back oil contracts that were sold at a higher price, and now that has ended, the market is drifting.

Other observers believe that oil prices have reached their peak for now and will be on the defensive as bearish fundamentals start to have an impact.

Dominick Chirichella, from the New York-based Energy Management Institute, said in a note that waning interest in a possible production-freeze deal from major producers was one factor. He also cited the stronger dollar and the prospect of Nigeria increasing exports if a deal is brokered with militants as other negatives that could weigh on prices in September.

The American Petroleum Institute releases its forecast for U.S. stock levels Tuesday, with official data from the Energy Information Administration to follow on Wednesday.

Nymex reformulated gasoline blendstock for September--the benchmark gasoline contract--rose 43 points to $1.4712 a gallon, while September diesel traded at $1.4875, 13 points higher.

ICE gas oil for September changed hands at $432.50 a metric ton, up $1.75 from Monday's settlement.

Write to Kevin Baxter at Kevin.Baxter@wsj.com

(END) Dow Jones Newswires

August 30, 2016 05:03 ET (09:03 GMT)