We study the problem of nonlinear development of oscillatory convective instability in a two-dimensional mushy layer during solidification of a binary mixture. We adopt the near-eutectic limit, making the problem analytically tractable using standard perturbation techniques. We consider also a distinguished limit of large Stefan number, which allows a destabilization of the system to an oscillatory mode of convection. We find that either travelling waves or standing waves can be supercritically stable, depending strongly on the sensitivity of permeability of the mushy layer to variations in the local solid fraction: mushy-layer systems with relatively weak sensitivity are more likely to select travelling waves rather than standing waves in the nonlinear regime. Furthermore, the decrease in permeability is found to promote the subcritical, and hence more unstable, primary oscillatory states. In addition to mapping out the location of different stable oscillatory patterns in the available parameter space, we give the detailed spatio-temporal structure of the corresponding thermal, flow and solid-fraction fields within the mushy layer, as well as the local bulk composition in the resulting eutectic solid.