Oil price rose above $40 a barrel for the first time in 2016, by almost six per cent on Thursday, thus erasing losses of the past two days, after major oil producers set a meeting date in Qatar to discuss a supply freeze.
United States crude settled up $2.12, or 5.8 per cent, at $38.46 a barrel, after falling by five per cent in the past two sessions. Brent crude finished up $1.59, at $40.33 a barrel, after falling below $40 in previous sessions.
Oil prices have surged more than 50 percent from 12-year lows since the Organization of the Petroleum Exporting Countries proposed the idea of a production freeze, boosting Brent up from around $27 a barrel and U.S. crude from around $26.
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This oil price gains is attributed to the news on Wednesday that Qatar will host a meeting on April 17, for major producers, both in and outside of the Organization of the Petroleum Exporting Countries to discuss output freeze plans.
Qatari Oil Minister Mohammed Bin Saleh Al-Sada said around 15 OPEC and non-OPEC producers, accounting for about 73 percent of global oil output, support the initiative.
Bin Saleh Al-Sada said in a statement that the April 17 meeting is to be a follow-up to the meeting that was held last month in Doha between Qatar, Saudi Arabia, Russia and Venezuela at which they proposed an accord to freeze oil output at January 2016 levels and called on other producers to do so.
Oil gained further yesterday 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 forecasted, Gasoline demand rose 6.4 percent over the past four weeks from a year ago.
Saudi Arabia and several fellow OPEC members had earlier agreed with non-OPEC Russia to freeze output at January levels in an attempt to prop up prices.
The renewed cooperation between OPEC and non-OPEC members had led to a rise in the price of oil above $40 per barrel but that is still a fraction of the $115 per barrel of almost two years ago.