Oil up 6pc as pro­duc­ers set meet­ing, Fed seen less hawk­ish

The Pak Banker - - MARKETS/SPORTS -

US oil prices jumped al­most 6 per­cent on Wed­nes­day, eras­ing losses of the past two days, af­ter ma­jor pro­duc­ers firmed up plans to meet in Qatar to dis­cuss an out­put freeze and U.S. crude stock­piles grew less than ex­pected. The mar­ket also ral­lied on a less hawk­ish U.S. mon­e­tary out­look, af­ter the U.S. Fed­eral Re­serve held in­ter­est rates steady and in­di­cated two rate hikes this year in­stead of the four ex­pected.

"Easy money is al­ways good for com­modi­ties and the Fed gave oil bulls yet an­other ex­cuse to push crude prices higher," said John Kil­duff, part­ner at New York en­ergy hedge fund Again Cap­i­tal.

U.S. crude <CLc1> set­tled up $2.12, or 5.8 per­cent, at $38.46 a bar­rel. It had fallen 5 per­cent in the past two ses­sions.

Brent crude <LCOc1> fin­ished up $1.59, or 4 per­cent, at $40.33 a bar­rel. Crude prices got a heady start af­ter Qatari oil min­is­ter Mo­hammed Bin Saleh AlSada said pro­duc­ers from within and out­side the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries will meet in Doha on April 17 to dis­cuss out­put freeze plans.

Around 15 OPEC and non-OPEC pro­duc­ers, ac­count­ing for about 73 per­cent of global oil out­put, sup­port the ini­tia­tive, the min­is­ter said.

Since the freeze was first pro­posed last month, prices have re­cov­ered about 50 per­cent from decade-low lev­els but been volatile with­out a firm meet­ing date.

Oil gained fur­ther on Wed­nes­day on data from the En­ergy In­for­ma­tion Ad­min­is­tra­tion (EIA) that showed 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. The EIA also re­ported that U.S. gaso­line de­mand over the past four weeks was up 6.4 per­cent from a year ago. So­ci­ete Gen­erale, how­ever, low­ered its crude price fore­casts cit­ing per­sis­tent over­sup­ply, rea­son­ing that re­cent price gains are weak and based on tem­po­rary sup­ply dis­rup­tions. "Mar­kets re­main well sup­plied, with oil and de­mand growth re­main­ing mod­est, lead­ing us to be­lieve oil prices will re­main rel­a­tively low for some time," said Rob Haworth, se­nior in­vest­ment strate­gist at U.S. Bank Wealth Man­age­ment, who helps man­age $125 bil­lion.

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