Crude oil prices steady at $34.41 per barrel in thin Asian trading

Crude oil futures were steady in lacklustre trading on Friday as Asian liquidity faded ahead of the Lunar New Year holiday across large parts of the region.

International benchmark Brent crude futures LCOc1 were trading at $34.41 per barrel at 0539 GMT, a notch below their last settlement while U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 6 cents at 31.78 a barrel.

Traders said liquidity was low due to the Lunar New Year holiday which will last for most of next week.

Oil prices have been extremely volatile since the start of the year, and in particular this week, as a string of bullish indicators like a slump in the dollar .DXY and potential talks on output cuts clashed with bearish reports of record U.S. crude inventories, higher output and a slowing global economy.

Investment bank Jefferies said on Friday that U.S. crude prices had traded within a 19 percent band over the last week and with inter-day moves approaching 11 percent.

"We expect that volatility could remain elevated especially on upward moves from short covering; net length in WTI is at its lowest level since 08/01/2013 implying a large short position," Jefferies said.

BMI Research, a unit of rating agency Fitch Group, said that "bloated crude inventories in the U.S. pose rising risk to WTI" and that "a continued build in storage over the coming six to eight weeks could collapse the price of WTI, driving a sharp reopening of the spread to Brent."

U.S. crude inventories USOILC=ECI climbed 7.8 million barrels in the week to Jan. 29 to 502.7 million barrels. Gasoline inventories USOILG=ECI rose to a record high, soaring 5.9 million barrels to 254.4 million barrels.