LONDON: Oil rebounded Thursday from recent 12-year lows but held below $30 per barrel, as traders digested news of a stronger-than-expected increase in US crude inventories.
In late afternoon deals in London, Brent North Sea crude for delivery in March advanced $1.92 to $29.80 a barrel compared with the close on Wednesday.
US benchmark West Texas Intermediate (WTI) for March rallied $1.55 to $29.90.
The US government's Energy Information Administration (EIA) reported that American crude inventories jumped 4.0 million barrels last week.
That was almost double market expectations for a gain of 2.2 million, according to analysts polled by Dow Jones Newswires.
However, industry body the American Petroleum Institute (API) had announced Wednesday a larger gain of 4.6 million barrels.
"The build was effectively priced in after the API had reported an even larger increase," noted Gain Capital analyst Fawad Razaqzada.
"So, this was not the sort of news the bears were looking for, especially given the fact that stocks of distillates also fell.
"Still, the short-term bias remains bearish while oil prices trade below $30 a barrel on a daily closing basis."
Saxobank analyst Ole Hansen added that it was a "bearish report but the market was so ripe for a bounce".
The EIA said distillates, including diesel and heating fuel, sank one million barrels last week, confounding expectations for a rise of 800,000 barrels.
The weekly inventories report was published one day later than normal owing to a US public holiday on Monday.
- Oil market takes hammering -
So far this year, oil has taken a hammering, with both main contracts already down about one quarter on the vast global supply glut.
The commodity crashed further on Wednesday, with Brent striking $27.10 -- last seen in early November 2003.
And WTI struck $26.19 -- a level witnessed in May of the same year.
After a calamitous start to the year, oil prices have crumbled further this week after the International Energy Agency (IEA) warned that the market could "drown in oversupply" with the return of Iranian crude after the lifting of Western sanctions offsetting any output cuts from other countries.
Oil was slammed also by plunging global stock markets and a gloomy International Monetary Fund downgrade to world economic growth.
"We have seen oil prices fall further to fresh multi-year lows below the $30 mark this week, as market sentiment continues to reflect concerns about supply and demand," Accenture research specialist Damien Cox told AFP.
"The story remains dominated by the oversupply as OPEC production continues apace and US shale output proves seemingly remarkably resilient.
"Fresh concerns over a slowing global economy have added impetus to the downside in recent days. The slide in equities may be reflects a more pessimistic macroeconomic outlook which in turn hints at lower energy demand."
- Saudis 'resilient' -
Meanwhile in Davos on Thursday, the chairman of Saudi Aramco, the world's largest crude producer, said OPEC kingpin Saudi Arabia could withstand a prolonged period of low prices.
"We have the most resilient capacity ... to take whatever the market serves us," said Khalid al-Falih at the World Economic Forum in the Swiss ski resort.
"If price continue to be low, we will be able to withstand it for a long, long time. Obviously we don't hope for that but we have prepared for it. We have the lowest cost production in the planet."
In both June and December last year, the Organization of the Petroleum Exporting Countries -- which pumps 40 percent of the world's oil -- refused to slash output.
The Saudi-backed policy is aimed at pushing oil prices lower in order to squeeze less-competitive players, including US shale producers, out of the market.
The cartel -- whose biggest player is Saudi Arabia -- is produces an estimated 32 million barrels per day, above its official 30-million-barrel target.
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