Oil rose above $42 a barrel on Friday, hitting its highest this year and extending a rally into a fourth week on expectations of a production freeze by major exporters.
Brent crude’s front-month contract LCOc1 was up at $42.44 a barrel while U.S. crude CLc1 gained 84 cents to $41.04 a barrel after rising as high as $41.13.
The benchmark had jumped by 4.5 per cent to close the previous session at $40.20.
Oil prices have surged by more than 50 per cent from 12-year lows reached in December. The rise is bolstered as the Organisation of Petroleum Exporting Countries, OPEC, floated the idea of a production freeze, boosting brent from about $27 and U.S. crude from around $26.
Many analysts think there is still steam in the rally. “We are leaving the period of low demand and starting to move toward the period when demand increases over the summer,” said Olivier Jakob, oil market analyst at Petromatrix at Zug in Switzerland.
He added that the massive oil glut that had helped to hammer prices last year at last appears to be stabilising. “We’re moving towards looking at an old surplus, rather than a new one being built up,” he said, adding that it is likely that Brent will stabilize around the mid-$40s.
Analysts said dollar weakness was also lifting oil. The dollar index is down 3.2 per cent so far this month.
A weaker dollar makes oil, which is priced in the U.S. currency, more affordable to holders of other currencies.
OPEC kingpin, Saudi Arabia and non-OPEC producers led by Russia will meet on April 17 in the Qatar capital, Doha in an effort to freeze supply.