Oil price spike restrained by surprise stockpile
New York's light sweet crude for February delivery rose 42 cents to US$43.05 a barrel in electronic trading on the New York Mercantile Exchange.
On Wednesday, light sweet crude tumbled to US$5.95 to settle at US$42.63, after the US Department of Energy said stockpiles of crude increased by 6.7 million barrels last week, far higher than analyst's forecast of 700,000 barrels.
London's Brent North Sea crude for February delivery rose 75 cents to US$46.61 a barrel on the ICE Futures exchange.
"The US oil inventories increase comes as a surprise and will drive prices lower," Thierry Lefrancois of French investment bank Natixis said to AP. "Prices can hold on only if OPEC keeps discipline as it seems to be the case," he said.
Toby Hassall, analyst with investment firm Commodity Warrants Australia, said the stock build "reminded the market that demand remains weak [and] any price rallies are likely to be short-lived in the near term."
Oil prices had risen earlier this week to above US$48 from a five-year low of US$33.87 a barrel on 19 December, as investors keep a close eye on the Gaza conflict between Israel and Hamas which could spread to the rest of oil-rich Middle East and affect supplies.
"There was a shift of focus to geopolitical issues last week," Hassall said. "If the situation calms down a little over there, the market's focus will come back to the weak global demand outlook, and that should keep prices pretty suppressed.'"
Also adding to tension in the oil market was the gas dispute between Ukraine and Russia, with all gas deliveries to Europe through Ukraine frozen for a second day. Both sides met on Thursday in Brussels to speak to the EU about how to resolve the standoff.