Oil prices edged up in early trading on Monday as a plunge in the U.S. dollar was seen spurring fuel demand, although traders said plentiful supplies capped increases.

International Brent crude futures were trading at $49.91 per barrel at 0014 GMT, up 27 cents from their last settlement, and U.S. West Texas Intermediate (WTI) crude futures were up 28 cents at $48.90 a barrel.

Traders said that the higher oil prices were largely a result of a sharp fall in the dollar on Friday, when the greenback lost over 1.5 percent intraday against a basket of other leading currencies.

The drop followed weak U.S. jobs data that sparked concerns over the state of the world's biggest economy, but a weaker dollar is seen as supporting fuel demand in the rest of the world as it makes dollar-traded oil imports cheaper.

"The weaker U.S.-dollar drove commodity prices higher," ANZ bank said on Monday.

Traders said frequent attacks on oil infrastructure in Nigeria, which has already pulled the country's output to over 20-year lows and which rebels said could fall to zero soon, were also supporting oil prices.

However, the price rally was capped on signs of increased output.

U.S. energy firms this week added rigs drilling for oil for the second time this year, energy services company Baker Hughes Inc. said on Friday, as producers cautiously upped activity following months of rising prices.

Drillers added nine oil rigs in the week to June 3, bringing the total rig count up to 325, compared with 642 a year ago, Baker Hughes said in its closely followed report.