NEW YORK Oil's rally lost steam on Thursday after three straight days of gains as growing record U.S. stockpiles countered OPEC plans for a production freeze, with some analysts saying the market has risen too much, too fast from 12-year lows.
U.S. crude futures settled slightly lower and Brent a touch higher after data from market intelligence provider Genscape suggested inventories at the Cushing, Oklahoma delivery hub rose 1.1 million barrels to 68.7 million during the week to March 1.
The U.S. government had already reported on Wednesday Cushing stockpiles rose to record highs of 66.3 million barrels last week. U.S. crude stockpiles as a whole rose 10.4 million barrels last week to an all-time peak of 518 million barrels. [EIA/S]
Brent futures, the global benchmark for crude, settled up 14 cents at $37.07 a barrel, after rallying earlier to $37.37. Brent has risen nearly $2 since Friday's close, with the bulk of it accumulated in the first two days.
U.S. crude futures settled down 9 cents at $34.57.
"We expect crude to retrace to the $30 per barrel range," Vikas Dwivedi, analyst at Macquarie Capital, said. He added that the market's rebound was "too early," discounting rapidly rising inventories.
In under two months, Brent and U.S. crude futures have risen more than 30 percent from 12-year lows of between $26 and $27.
The rally was fueled by pledges from the Organization of the Petroleum Exporting Countries to work with other major oil producers to freeze production at January's highs.
Some members of OPEC plan to meet other oil producers in Russia around March 20 for new talks on the freeze, Nigeria's petroleum minister said, forecasting the meeting would spark a dramatic reaction in crude prices.
"Both the Saudis and the Russians, everybody is coming back to the table," minister Emmanuel Ibe Kachikwu told a conference in Abuja. "I think we're very humbled today to accept that if we get to a price of $50, it will be celebrated. That's a target that we have."
A Gulf OPEC delegate said no decision on the date or venue of a meeting has been made yet, although the Gulf countries prefer that it would be held in the first half of April, and preferably in Doha, or some other Gulf city.
The Relative Strength Index (RSI) in U.S. crude futures stood above 60 on Thursday, heading toward the overbought level of 70, Reuters data showed. The RSI was below the oversold level of 30 on Jan. 20.
Brent's open interest was, meanwhile, at a record high of nearly 518,000 contracts, indicating heavy speculative buying, traders said.
"Many are convinced the market has bottomed," said Pete Donovan, broker at Liquidity Energy in New York. "Cautiously constructive opinions are becoming more prevalent."
(Additional reporting by Amanda Cooper in LONDON and Henning Gloystein and Manesha Pereira in SINGAPORE; Editing by Marguerita Choy)
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