Oil rose by more than $1 to above $117 a barrel on Thursday, building on gains triggered in the previous session by a larger-than-expected drop in U.S. crude and gasoline inventories, and disruptions to Caspian supplies, Reuters reported. U.S. crude was up 50 cents at $116.50 by 0935 GMT, on top of a $3 rise on Wednesday. London Brent climbed 51 cents to $113.98. "Fundamentals certainly warrant a rebound," said Jan Stuart, economist at UBS, adding however that oil markets still looked vulnerable in the near-term. "And fundamentals news may continue to matter very little until markets get out of their deep, bearish rut," he added. Oil prices leapt on Wednesday after U.S. government data showed crude stocks in the world's top energy consumer dropped 400,000 barrels last week, while gasoline inventories fell by 6.4 million barrels. The fall in gasoline stocks was much larger than analysts' expectations of a 2.1-million-barrel decline. Distillate stocks also unexpectedly fell. Disruptions to energy exports from the Caspian region also underpinned prices as Western powers tried to shore up support for a shaky ceasefire between Russian and Georgian troops around the breakaway region of South Ossetia. Georgia had accused Russia of breaking the ceasefire in their six-day-old conflict on Wednesday, and U.S. President George W. Bush demanded Moscow resolve a crisis that has strained relations with the United States. BP has closed an oil pipeline and a natural gas pipeline running from its Caspian Sea fields through Georgia but said neither had been damaged. A third BP pipeline that runs through Georgia, the Baku-Tblisi-Ceyhan oil pipeline, was shut last week following an explosion in Turkey. Repairs have begun on the pipeline, but it is still not known when it will reopen.
