NEW YORK Oil prices edged higher on Thursday after news of a Russian crude pipeline outage, shrugging off growing record U.S. crude stockpiles as some analysts argued the four-day rally was defying fundamentals.
Crude prices fell in early trade but rebounded after Russia's largest oil producer Rosneft ROSN.MM said one of its pipelines that served as a link for delivering crude to China was damaged by power failure. The pipeline is expected to be fixed in 24 hours, Rosneft said.
Brent futures, the global benchmark for crude, were up 11 cents at 37.04 a barrel by 11:24 a.m. (1624 GMT) after plumbing a session low at $36.35.
U.S. crude futures rose 30 cents to $34.96, against its intraday low of $34.19.
"Crude seems to be increasingly discounting bearish news and data including rapidly rising inventory levels," said Vikas Dwivedi, analyst at Macquarie Capital. "Market fundamentals, in our view, suggest the rally is too early, and we expect crude to retrace to the $30 per barrel range."
In under two months, Brent and U.S. crude futures have gained about $10, or around 30 percent, a barrel from 12-year lows of between $26 and $27.
The rally has been 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.
Data from market intelligence provider Genscape suggested stockpiles at the main delivery hub for U.S. crude futures have risen to a new peak abive the record high the government reported on Wednesday, traders who saw the data said.
Genscape's data showed Cushing stockpiles rose 1.1 million barrels to 68.7 million barels during the week to March 1, above the 66.3 million barrels in the U.S. government data for week ending Feb. 26. [EIA/S]
U.S. crude stockpiles as a whole rose 10.4 million barrels to an all-time high of 517.98 million barrels last week, government data showed. [EIA/S]
(Additional reporting by Amanda Cooper in London; Editing by Marguerita Choy)
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Updated Date: Mar 03, 2016 23:00 PM