Oil prices edge up in Asian trade

Oil prices rebounded in Asia today after plunging in the previous session in reaction to news that the OPEC cartel had overproduced in December, while it also cut its global demand outlook.

US benchmark West Texas Intermediate for February, which dived $2.23 yesterday, was up 31 cents at $46.56.

Brent North Sea crude for March added 20 cents to $48.47. The February contract for Brent fell $1.02 yesterday, its last day of trading.

Despite today's small gains, the market remains depressed by a supply glut and weak demand, while analysts warning of more volatility to come.

The 12-nation OPEC cartel, which produces about one third of global supplies, said in a monthly report yesterday that its production rose to 30.2 million barrels a day in December, above its 30 million limit.

It also projected that demand for its oil would fall to 28.8 million barrels per day this year from 29.1 million in 2014.

"The yo-yo effect of the crude oil prices can be attributed to the uncertainty in the market," said Shailaja Nair, associate editorial director at energy information provider Platts, pointing to an 'unstable dollar' and an 'irregular equity market'.

"OPEC has just forecast a drop in demand for its oil this year and this could mean that the price rally we saw this week is unlikely to last," she said.

Prices have lost more than half their value since sitting above $100 in June, with weak demand and a strong dollar exacerbated by OPEC's decision in November to maintain output levels despite a global glut.