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Oil rallies to $41, near 2016 high, on producer meeting
[LONDON] Oil rose above US$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 was up 81 cents at US$41.14 a barrel by 1009 GMT. It has rallied over 50 per cent from a 12-year low of US$27.10 in January and is close to its 2016 peak of US$41.48 reached on March 8.
US crude was up 92 US cents at US$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 US 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 US$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 per cent of global oil output, supported the initiative.
Oil broker PVM said the meeting was "an encouraging step" but was sceptical 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 US inventories. Crude stocks still hit a record, the US Energy Information Administration said on Wednesday.