Oil prices steadied on Friday as traders reassessed the market a day after a sharp rise on reports of a possible strike in Venezuela and signs that OPEC producers may cut output again.
New York's main contract, light sweet crude for delivery in February, fell US$0.13 to close at US$45.43 per barrel, after surging by US$2.17 on Thursday.
In London, the price of Brent North Sea crude oil for delivery in February, rose by US$0.33 to US$43.18, after jumping by US$2.34 a day earlier.
Mike Fitzpatrick at Fimat USA said traders are reluctant to push prices above US$46 and that the market appears to be in a range of US$40 to US$46 "until something fundamental happens" to change the picture.
Traders said a number of factors appeared to have been behind the recent rally this week, including a reported labor dispute in Venezuela, signs OPEC producers may cut output again later this month and a fall in US natural gas stocks.
"Numerous explanations have been put forward on the news-wires to account for the move, including a larger than expected draw in US natural gas inventories, fresh concern over winter fuel shortages, fears of a strike by oil workers in Venezuela and concern that OPEC is preparing to cut production again at the end of the month," Barclays Capital analysts commented.
OPEC members are due to meet at their Vienna headquarters on Jan. 30 to review output.
Iranian Oil Minister Bijan Namdar Zanghaneh told reporters at a regional energy conference in New Delhi Thursday: "The market is oversupplied. There is no doubting it."
The cartel agreed in Cairo last month to reduce production by 1 million barrels a day from the start of this year to bring the cartel closer to its official output ceiling of 27 million barrels.
OPEC ministers said then that they were ready to reduce output again if needed to mop up excess supply in anticipation of a seasonal downturn in demand as the northern hemisphere winter ends.
Societe Generale bank analyst Deborah White said that prices had been pushed higher on Thursday when Iran said it would cut oil output if US crude oil futures prices fell below US$40 a barrel.