The price of oil was nearly unchanged above $94 a barrel Thursday, stabilizing after a sharp drop the day before sparked by rising U.S. crude supplies.
By early afternoon in Europe, benchmark oil for May delivery was down 5 cents to $94.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $2.74, or 2.8 percent, on Wednesday. The last time oil fell by that much in a day was on Nov. 20.
Oil plunged after the U.S. Energy Department said crude oil supplies grew by 2.7 million barrels to 388.6 million barrels in the week ended March 29. The U.S. supply of oil is now 7.2 percent above year-earlier levels and the highest since July 27, 1990, when it was at 391.9 million barrels.
"We regard the market's price reaction to the inventory data to be exaggerated," said analysts at Commerzbank in Frankfurt. "Nonetheless, the oil market will remain under pressure in the short term."
Oil production in the U.S. is about 7.1 million barrels a day, up 22 percent from a year earlier and the highest in two decades. Output has jumped as oil companies use techniques such as horizontal drilling and hydraulic fracturing, or fracking, to unlock crude oil trapped in shale rock formations in the U.S.
Oil prices were also struggling to advance because of the stronger dollar, which makes crude more expensive and a less attractive investment for traders using other currencies.
The dollar has risen partly thanks to a big drop in the yen after the Bank of Japan announced an aggressive monetary easing campaign. Looser monetary policy tends to weaken a country's currency. The dollar has also strengthened against the euro.
Brent crude, used to price many kinds of oil imported by U.S. refineries, rose 14 cents to $107.25 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Heating oil fell 0.73 cent to $2.9947 a gallon.
— Natural gas rose 1 cent to $3.91 per 1,000 cubic feet.
— Gasoline fell 0.9 cent to $2.905 a gallon.
Pamela Sampson in Bangkok contributed to this report.