In midday deals in London, Brent North Sea crude for delivery in April
London - AFP
Oil rebounded on bargain-buying Wednesday after the previous day's plunge but analysts warned any gains would be limited as the global glut showed no sign of letting up.
Investors were also nervously awaiting the release later in the day of a report on US stockpiles that is forecast to show a further increase in inventories.
In midday deals in London, Brent North Sea crude for delivery in April added 54 cents to $30.86 a barrel.
US benchmark West Texas Intermediate (WTI) for March delivery gained 45 cents to $28.39 a barrel compared with Tuesday's close.
WTI plunged 5.9 percent and Brent dived 7.7 percent on Tuesday after the International Energy Agency (IEA) said in its monthly report that the global surplus would be larger than previously expected in the first half of 2016.
It noted that the Organization of the Petroleum Exporting Countries (OPEC) was chiefly responsible for the oversupply, adding that Saudi Arabia, Iraq and Iran -- which has just seen nuclear-linked sanctions lifted -- had "all turned up the taps" in January.
Phillip Futures analyst Daniel Ang also said Wednesday's price rebound was helped by the reopening of some regional markets after the Chinese New Year break.
"Chinese investors and traders are coming back to support the market after the Lunar New Year holidays," he told AFP. "They are buying crude oil on discount."
But Ang said the rebound was unlikely to be sustained, with the US Department of Energy expected to report later Wednesday another rise in commercial crude stocks in the week ending February 5.
"The current issue is still about oversupply. Fundamentals are still the same," he added.
Crude prices have crashed from peaks above $100 per barrel in mid-2014 to under $30, hit by a perfect storm of overproduction, oversupply, weak demand and a slowdown in the global economy, particularly key consumer China.
"With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term," the Paris-based IEA had said on Tuesday.
"In these conditions the short term risk to the downside (for prices) has increased," added the watchdog that advises countries on energy policy.
Brent and New York oil prices had tumbled on January 20 to 12-year lows at $27.10 and $26.19 per barrel respectively.