US crude oil prices were stable in early Asian trading on Friday after bouncing away from 12-year lows the previous day as rallying financial markets gave some traders reason to cash in on record short positions.
Front-month West Texas Intermediate (WTI) crude futures were trading at $29.82 per barrel at 0056 GMT, up 29 cents from their last settlement and over $3.50 above 2003 lows reached earlier this week.
Traders said that a lot of people with open short positions in the market, which profit from falling prices, had decided to cash in when prices had fallen 30 percent between the beginning of the year and the middle of this week, and flip into buying at low costs, lifting prices.
“More stable global markets are likely to see speculative buying re-emerge in commodities that have suffered heavy losses in recent weeks. However, these rallies are likely to remain short-lived,” ANZ bank said.
Analysts said that the fundamental reason for low oil prices remained unchanged, with producers around the world pumping over 1 million barrels of crude every day beyond demand, leaving storage tanks brimming.
U.S. crude inventories rose by 4 million barrels in the last week, compared with analyst expectations for an increase of 2.8 million barrels, according to the U.S. Energy Information Administration (EIA).
“At 486.5 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years,” the EIA said.