Brent hovered near $55 a barrel on Thursday after data showed U.S. crude stockpiles set a record for the fifth week in a row, renewing fears that supply is still far outpacing demand.
March Brent futures were up 40 cents to $55.06 a barrel at 0429 GMT, following a 3-percent loss in the previous session that saw prices break below $54 at one point.
U.S. March futures were trading up 56 cents at $49.40, after falling more than 2 percent.
“For today, we should expect some recovery considering prices have been dropping,” said Daniel Ang of Phillip Futures in Singapore in a note, adding news of industry restructuring and lower oil rig counts had been temporarily pushing up prices, but that crude production still hadn’t actually declined.
Brent prices have gained as much as 30 percent from a mid-January low of $45.19 a barrel, but the benchmark has been pulling back this week as evidence of a continuing glut mounts.
“It is difficult to declare with conviction that oil is back in a bull market,” Nomura analysts said in a note dated Feb. 11.
“It will probably take a few months for the reduction in energy capex budgets to be fully reflected into business activities,” the analysts said, referring to cuts in capital expenditures that would eventually reduce output.
On Wednesday, Saudi Arabia’s oil minister met with the chairman of Russian state-controlled energy giant Gazprom, Saudi state media said, and discussed cooperation between oil producers belonging to the Organization of Petroleum Exporting Countries (OPEC) and non-members like Russia.
Under Saudi guidance, OPEC decided last November not to cut output, allowing oil prices to plunge in an effort to protect its market share against higher-cost producers. Russia would prefer to see much higher prices because cheap oil has put its state finances under heavy pressure.
Meanwhile, Ukrainian peace talks on Wednesday were met by a surge of fighting. Washington is now openly talking of arming Ukraine to defend itself from “Russian aggression”, raising the prospect of a proxy war in the heart of Europe between Cold War foes.
Elsewhere, Saudi Arabia will keep March crude supply to Asia steady, industry sources told Reuters on Thursday.