Oil Bounces Back, Rallies To $41, Near 2016 High, On Producer Meeting | Independent Newspapers Limited
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Oil Bounces Back, Rallies To $41, Near 2016 High, On Producer Meeting

Posted: Mar 18, 2016 at 1:00 am   /   by   /   comments (0)


Oil rose above $41 a barrel on Thursday, trading close to a 2016 high,
bolstered by a plan among some of the world’s biggest producers to
meet next month to discuss supporting the market.
OPEC and non-OPEC producers including the top two exporters, Saudi
Arabia and Russia, will meet on April 17 in Qatar over a plan to
freeze output, increasing the likelihood of the first global supply
deal in 15 years.
Brent crude LCOc1 was up 81 cents at $41.14 a barrel by 1009 GMT. It
has rallied over 50 percent from a 12-year low of $27.10 in January
and is close to its 2016 peak of $41.48 reached on March 8.
U.S. crude CLc1 was up 92 cents at $39.38 a barrel.
“For now, the market is staying well supported, and the dollar is
proving additional support,” said Olivier Jakob, oil analyst at
Petromatrix. “It will be difficult to return to the lows of the year.”
The U.S. dollar weakened following a statement by the Federal Reserve
on Wednesday that undermined expectations of a rise in interest rates
by June.
A weaker dollar makes dollar-denominated commodities cheaper for
holders of other currencies, and tends to support oil.
The producer meeting follows a preliminary deal in February between
Saudi Arabia, Qatar and Venezuela, plus non-OPEC Russia, to freeze
output in a bid to tackle the excess supply that has caused prices to
slide from levels above $100 seen in mid-2014.
Qatar’s Energy Minister Mohammed Bin Saleh Al-Sada said on Wednesday
around 15 producers in and outside the Organization of the Petroleum
Exporting Countries, accounting for about 73 percent of global oil
output, supported the initiative.
Oil broker PVM said the meeting was “an encouraging step” but was
skeptical that the freeze deal, which ministers have said is based on
January 2016 output, would prop up prices.
“It is hard to see such a meeting reaching an agreement that is
price-supportive because these producers are discussing the prospect
of freezing oil output at historically high levels,” Tamas Varga of
PVM said in a report.
Crude also gained support from a smaller-than-expected rise in U.S.
inventories. Crude stocks still hit a record, the U.S. Energy
Information Administration said on Wednesday.