OIL PRICES UP TO $41.23
Oil prices rose on Thursday as the dollar weakened after the Federal Reserve dialed down its expectations for rate increases, while major oil producers set a meeting to discuss a supply freeze.
Brent crude, the global oil benchmark, rose 2.2% to $41.23 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 2.7% at $39.50 a barrel.
The gains follow a two-day policy meeting by the Fed that ended with central bankers pushing back their timeline for interest rate increases in the U.S., pointing to risks posed by weak global growth and volatility in financial markets.
Easy-money policies by central banks tend to boost the attractiveness of riskier assets like commodities. In addition, the Fed's stance pushed down the U.S. dollar, with The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, down 0.6% on Thursday. As oil is priced in dollars, it becomes more attractive for holders of other currencies as the greenback falls.
"Fund managers will be looking for risk to put [money] on," said Stuart Ive, a financial adviser at brokerage OM Financial Ltd.
Meanwhile, data released Wednesday in the U.S. showed oil inventories rose less than expected while production fell slightly. Global output declined to 9.07 million barrels a day last week, down from 9.08 million barrels the week before. Production has stagnated in recent months to around 9.1 million barrels a day, down from a peak at 9.7 million last April.
Oil prices remained propped up by news that Qatar will host a meeting April 17 for major producers, both in and outside of the Organization of the Petroleum Exporting Countries.
News of a firm date for such a meeting restores the prospect of a production freeze by the big global oil exporters. The prospect of an output freeze has diminished in recent weeks after Iran balked at joining. But OPEC officials said Saudi Arabia and other leading exporters would limit their output even without Iran's cooperation.
"Iran is not expected to participate neither in the meeting nor in an output freeze at January levels like the deal proposes," analysts at Global Risk management said in a note. "The country could consider curbing output when it reaches pre-sanctions level of 4 million barrels a day—still some barrels to go from current [levels of] around 2.8 million barrels a day."
Nymex reformulated gasoline blendstock—the benchmark gasoline contract—rose 1.1% to $1.44 a gallon. ICE gas oil changed hands at $373.50 a metric ton, up $8.25 from the previous settlement.
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