US crude prices edge up on short covering, but oversupply still bites

US crude oil prices edged up in early trading in Asia on Thursday but are struggling to break away from the $40 per barrel mark as oversupply and high inventory levels ensure an ongoing glut.

US West Texas Intermediate (WTI) crude futures were trading at $40.88 per barrel at 0031 GMT, up 13 cents from their last settlement.

The contract fell below $40 for the first time since August on Wednesday, and traders said that the slight gains were more a result of short covering than a more bullish sentiment.

Overall, oil markets remain oversupplied, with rising US stockpiles the most visible evidence.

"Rising US crude stockpiles continue to remain a major (downward) driver of price," ANZ bank said on Thursday.

US crude inventories grew by 252,000 barrels last week to 487.3 million barrels, close to record highs, according to data from the Energy Information Administration (EIA), highlighting that more crude is being produced than needed.

As a result, US crude futures have been struggling to break higher this week, although ANZ said that rising crude demand from US refineries was also preventing prices from falling much further.