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    Friday, March 18, 2016

    Oil Hits 2016 High Above US$42 On Production And Demand Outlook

    LONDON (March 18): Oil rose above US$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, stronger seasonal demand and dollar weakness.

    Brent crude's front-month contract was up 77 cents at US$42.31 a barrel by 1239 GMT, having touched a 2016 high of US$42.40.

    US crude gained 84 cents to US$41.04 a barrel after rising as high as US$41.13. The benchmark had jumped by 4.5% to close the previous session at US$40.20.

    Oil prices have surged by more than 50% from 12-year lows reached in December, bolstered as the Organization of the Petroleum Exporting Countries (OPEC) floated the idea of a production freeze, boosting Brent from about US$27 and US crude from around US$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 stabilise around the mid-US$40s.

    Crude inventories in the United States increased by 1.3 million barrels in the week to March 11, to a record high of 523.2 million barrels, though that was a much smaller build than the 3.4 million barrels expected by analysts, the Energy Information Administration said on Wednesday.

    Analysts said that dollar weakness was also lifting oil.
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