Oil Rallies To 2016 Highs, U.S. Crude Hits $40 On Producer Meeting
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NEW YORK (Reuters) – Oil prices hit 2016 highs on Thursday, with U.S. crude piercing the $40 psychological barrier, on optimism that major producers will strike an output freeze deal next month amid soaring gasoline demand in the United States.
A weaker dollar (.DXY) after a Federal Reserve policy decision on Wednesday that indicated two U.S. rate hikes this year instead of four also drew oil buyers using currencies such as the euro .
“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 surged more than 50 percent from 12-year lows since the Organization of the Petroleum Exporting Countries floated the idea of a production freeze, boosting Brent up from around $27 a barrel and U.S. crude from around $26.
Brent crude‘s front-month rose $1.04 to $41.37, after earlier reaching the year’s peak of $41.60.
“For now, the market is staying well supported, and the dollar is providing additional support,” said Olivier Jakob, oil analyst at Petromatrix. “It will be difficult to return to the lows of the year.”
U.S. crude inventories last week climbed to its 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 percent over the past four weeks from a year ago.
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