NEW YORK Oil prices were largely steady in volatile trade on Thursday as growing record U.S. stockpiles muted a three-day rally inspired by OPEC plans for a production freeze, strengthening analysts' arguments the market has risen too much, too fast from 12-year lows.
Global crude markets lost their steam after three-day run higher following data from market intelligence provider Genscape suggesting inventories at the Cushing, Oklahoma delivery hub for U.S. crude futures rose 1.1 million barrels to 68.7 million during the week to March 1.
U.S. government data on Wednesday had already reported Cushing stockpiles at 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 517.98 million. [EIA/S]
Brent futures, the global benchmark for crude, were down 1 cent at $36.92 a barrel by 1:19 p.m. (1819 GMT) after rallying earlier to $37.37. Brent has risen by nearly $1.90, or 6 percent, since Friday's settlement.
U.S. crude futures slipped 9 cents to $34.57, against an intraday peak at $35.32.
"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 2003 lows of between $26 and $27.
The rally was fuelled 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 in U.S. crude futures stood above 60, heading towards the overbought level of 70, Reuters data showed. It had hovered 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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Updated Date: Mar 04, 2016 00:15 AM