Oil steadied on Friday in a volatile session, as bearish fundamentals pressured prices despite bullish indications earlier in the week.
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International benchmark Brent crude futures were 2 cents higher at $34.48 per barrel at 6.35 a.m. ET, trading in a range of around $34-$35 a barrel so far this session.
U.S. West Texas Intermediate (WTI) crude futures were up 11 cents at $31.83 a barrel.
"Volatility on the oil market is extremely high just now. This is due for the most part to the high speculative activity on the part of market participants," Commerzbank said in a note.
Crude futures benefited earlier this week from the sudden liquidation of a $600 million leveraged fund bet on falling prices.
"The massive increase in speculative (net) long positions in Brent rather than in WTI could be quickly corrected and cause a considerable setback on the market," Commerzbank warned.
An effort by Venezuela to rally support for concerted action to boost prices also buoyed futures.
Venezuelan Oil Minister Eulogio Del Pino is due to meet his Saudi counterpart Ali al-Naimi in Riyadh on Sunday, after meeting the Qatari and Omani ministers this week.
A weaker dollar also lent limited support to prices, as the U.S. currency heads for its heaviest weekly loss since 2009.
"The surplus situation continues to weigh on the front end while the softer dollar has been able to support the longer-term contracts, at least in Brent crude," Bjarne Schieldrop, chief commodities analyst with SEB in Oslo, said.
Oil has been extremely volatile since the start of the year, and in particular this week, as a string of bullish indicators such as a slump in the dollar <.DXY> and potential talks on output cuts clashed with bearish reports of record U.S. crude inventories, higher output and a slowing global economy.
"We expect that volatility could remain elevated especially on upward moves from short covering; net length in WTI is at its lowest level since 08/01/2013 implying a large short position," investment bank Jefferies said.
BMI Research said "bloated crude inventories in the U.S. pose rising risk to WTI" and that "a continued build in storage over the coming six to eight weeks could collapse the price of WTI, driving a sharp reopening of the spread to Brent".
U.S. crude inventories climbed by 7.8 million barrels in the week to Jan. 29 to 502.7 million barrels, the Energy Information Administration said on Wednesday [EIA/S].
(Additional reporting by Henning Gloystein in Singapore; Editing by Susan Thomas and Dale Hudson)