LONDON: Brent oil held above $70 a barrel on Wednesday in choppy trading as the market searched for a price floor after a nearly 40 percent fall since June.
Trade in oil has been volatile since the Organization of the Petroleum Exporting Countries (OPEC) said last week it would not lower output despite an oversupplied market.
Brent hit a five-year low below $68 a barrel on Monday after averaging around $110 a barrel in 2011 to 2013. "There has been a technical bounce back from the very strong declines that we have seen in the lead-up to and after the OPEC meeting," said Harry Tchilinguirian, an oil analyst at BNP Paribas in London.
"Seeing some rebound is normal, but the downtrend remains in place. It is possible that we can go down further." Brent for delivery in January was up 4 cents at $70.58 a barrel by 1241 GMT after falling by $2 on Tuesday on a deal between Baghdad and its Kurdish region over oil sales. Earlier on Wednesday it rose to a day high of $71.46, before retracing those gains.
US crude for January delivery rose to $67.10 a barrel, off the day's high of $67.97 but up 22 cents from the previous session, when prices dropped by more than $2.
OPEC's oil supply fell by 340,000 barrels per day (bpd) in November as a recovery in Libya faltered, a Reuters survey found, although a lack of deliberate cutbacks by Saudi Arabia and other key members underlined their focus on defending market share. The Kingdom will consider cutting production only if other countries, including non-OPEC producer Russia, also take part in cuts, former Saudi intelligence chief Prince Turki bin Faisal said on Tuesday.
Chart analysts warned that the months-long rout may not be over and that US crude could plunge towards $50 per barrel if a handful of tenuous support levels give way after a period of consolidation.
American Petroleum Institute data showing a bigger-than-expected fall in crude stocks in the United States last week, which provided some support for US crude.
The API said crude inventories fell by 6.5 million barrels to 373 million in the week to Nov. 28 versus analysts' expectations for an increase of 1.3 million barrels. Stocks at the US crude contract's delivery hub of Cushing, Oklahoma, fell 610,000 barrels.
Data from the US Energy Information Administration is due on Wednesday at 10:30 a.m. EST (1530 GMT).
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