U.S. crude breaks through US$40 as oil rallies for second day on optimism for producer meeting

NEW YORK – Oil surged above US$40 a barrel in New York the very first time since December as central banks?in the U.S. to Norway signaled they will continue to provide economic stimulus to support demand.

A weaker dollar following a Federal Reserve policy decision on Wednesday that indicated two U.S. rate hikes this year rather than four also drew oil buyers using currencies such as the euro.

OPEC kingpin Saudi Arabia and non-OPEC producers led by Russia will come across on April 17 within the Qatar capital Doha, increasing the likelihood of the first global supply offer Fifteen years.

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“The remote possibility that a coordinated supply control effort comes from this meeting, assuming it even happens, has put market bears on the defensive,” said Pete Donovan, broker with Liquidity Energy in New York.



Oil prices have rallied about Half from 12-year lows since the Organization of the Petroleum Exporting Countries floated the idea of a production freeze, boosting Brent up from around US$27 a barrel and U.S. crude from around US$26.

WTI for April delivery rose US$1.51, or 3.9 pe rcent, to US$39.97 a barrel at 12:27 p.m. on the New York Mercantile Exchange. Futures touched US$40.06, the greatest since Dec. 7.

Brent for May settlement climbed $1.12 to $41.45 a barrel around the London-based ICE Futures Europe exchange.

“For the time being, the market is staying well supported, and also the dollar provides additional support,” said Olivier Jakob, oil analyst at Petromatrix. “It will be difficult to return to the lows of the season.”

WTI also briefly traded at a premium to Brent on Thursday, the first time since January, as traders piled into the U.S. crude market on bets of the uptick in domestic oil exports.

U.S. crude has gained further traction on smaller stockpile builds recently, and surging gasoline consumption.

U.S. crude inventories last week climbed to the fifth straight week of record highs but by just 1.3 million barrels, a much smaller build than forecast, government data showed. Gasoline demand rose 6.4 per cent in the last a month from a last year.

Thomson Reuters