* Dollar hits 18-month low against Japan's yen
* But signs of supply overhang persist
* Iraq's southern oil field exports hit 3.364 mln bpd
* Saudi, Iranian production also rising
(Adds comment, physical crude price, updates futures prices)
By Henning Gloystein
SINGAPORE, May 3 (Reuters) - Oil prices rose by more than 1
percent on Tuesday as the dollar slipped to an 18-month low
against the yen, potentially spurring fuel demand, although
gains were restricted by rising Middle East output that renewed
concerns of a global supply overhang.
Brent crude futures LCOc1 were trading at $46.29 per
barrel at 0729 GMT, up around half a dollar or 1 percent from
their last close. U.S. crude futures CLc1 were also up almost
half a dollar and more than 1 percent at $45.25 a barrel.
There were similar moves in physical oil markets, where
Dubai crude, as quoted by price-reporting agency Platts, rose to
an average of $39.028 a barrel for April, the highest in five
months, traders said on Tuesday.
Higher oil prices came as the dollar slumped, which makes
purchases of dollar-denominated commodities cheaper for
countries using other currencies, potentially spurring demand
and investor interest.
The dollar has lost more than 7 percent of its value this
year against a basket of other leading currencies .DXY ,
hitting an 18-month low against Japan's yen JPY= on Tuesday.
Virendra Chauhan of Energy Aspects said the weak U.S. dollar
was a factor in rising oil prices, but also pointed to a
"sentiment shift", with significant passive and commodity
trading advisor (CTA) money flows back into energy after two
years out.
Traders said, however, the gains were capped by rising
output in the Middle East as well as fears over China's economic
health after factory activity shrank for a 14th straight month
in April.
Barclays (LON:BARC) said China's oil demand grew by 180,000 barrels per
day (bpd) in the first quarter, smaller than in previous years.
"A key area to watch is the Chinese car industry," the bank
said.
China's car sales have been strong, but many analysts expect
growth to fizzle as a government incentive scheme to support
sales ends by the end of 2016.
On the production side, Iraq said its oil shipments from
southern fields were at an average of 3.364 million bpd in
April, up from 3.286 million in March.
Production from top exporter Saudi Arabia was 10.15 million
bpd in April, but sources said it may return to near-records of
10.5 million bpd soon.
Iran is also raising output following an end to sanctions in
January, having increased its exports to almost 2 million bpd
from a little over 1 million bpd at the start of the year.
The Middle East supply jump counters declines in the United
States, where production has slumped from a peak of around 9.6
million bpd in June 2015 to below 9 million bpd now, according
to government data.
This helped lift crude by almost 70 percent from decade lows
hit in early 2016.