Oil firms after collapsing close to six-year low

World oil prices edged higher Friday in nervous deals, having dramatically slumped close to a six-year low the previous day on the back of record US crude stockpiles.

West Texas Intermediate (WTI) for March delivery added 41 cents to $44.94 a barrel, one day after striking a March 2009 low of $43.58.

European benchmark Brent North Sea crude for March rose 36 cents to $49.49 a barrel in midday London deals.

After striking the latest low, oil prices finished Thursday in positive territory in volatile trade. WTI eked out a gain of eight cents, while Brent added 66 cents.

"Activity ... has seen Brent prices build on support found around yesterday's close as prices attempt to target levels towards $49.50," said Sucden analyst Kash Kamal.

He added that WTI prices had fallen this week "largely due to the assessment of this week’s official EIA crude oil inventory data."

The US government's Energy Information Administration (EIA) said crude oil stockpiles surged last week to the highest level since 1982, according to its weekly data published on Wednesday.

US crude production, meanwhile, rose to the highest level since at least 1983.

"The latest increase in US stocks is weighing on the WTI price," noted Commerzbank analysts.

Oil has lost more than half its value since June last year when the commodity was sitting at more than $100 a barrel due to a global supply glut, boosted largely by robust US shale oil production.

The OPEC oil cartel's decision last November to maintain output levels despite the crude oversupply is also weighing down on prices in the face of weak demand from slowing economies worldwide.

Crude futures had fallen in earlier Asian trading hours after the US Senate approved a bill to build an oil pipeline from Canada to refineries in the US Gulf Coast, adding to concerns over a supply glut.

The US Senate also on Thursday approved a bill authorising construction of the controversial Keystone XL oil pipeline from Canada to the United States.

After weeks of at-times fierce debate, the bill passed with 62 votes to 36, with nine Democrats defying President Barack Obama to support a project that would transport crude from Alberta's oil sands to refineries along the US Gulf Coast.

The House of Representatives approved its own Keystone legislation earlier this month and now must decide whether it passes the Senate measure or enters into bicameral conference to thrash out a compromise bill.

"The Keystone pipeline will move US oil production more efficiently in the long term, and in the grand scale of things this will further exert downward pressure on oil prices," said Shailaja Nair, associate editorial director at energy information provider Platts.