Oil prices steadied today from heavy losses yesterday when speculative funds led a sell-off as a smaller-than-expected fall in US natural gas stocks eased worries over winter fuel inventories.
Brent crude in London was up 26 cents at $29.60 a barrel after sliding $1.34, or 4 per cent, yesterday. US light crude was up 31 cents at $33.75 a barrel.
US prices are now more nearly $2 below 10-month highs hit earlier in the week. Traders said yesterday's slide had been overdue.
"There are still problems with stocks and low temperatures in the US," one London trader said. "But the markets had been too high for too long."
Even with yesterday's falls prices are still more than $3.50 up from the start of December on worries that freezing weather in the US northeast will strain US crude stocks that are at their lowest level since 1975.
Speculative investment funds have driven the oil price rally as a slump in the value of the US dollar on currency markets draws hedge-fund cash to oil and other commodities.
Temperatures in key heating oil-consuming region the US northeast were also still very low and expected to remain below normal until at least Monday, according to private weather forecaster Meteorlogix.