Oil Retraces Gains After 2016 Highs; Weekly Rise Still Holds
Oil prices were in steady in volatile trading on Friday after hitting 2016 peaks, but were on track to multi-week gains on expectations of a production freeze by major exporters and stronger U.S. fuel demand.
Strength in world equity markets, which were up for a fifth straight week, had also boosted oilearlier. Shares of U.S. energy companies <.SPNY> traded near 3-1/2 month highs on Wall Street.
Brent crude <LCOc1> was up 1 cent at $41.55 a barrel by 12:40 p.m. EDT, rising $1 earlier to a 2016 high of $42.54. It was on track to a 3 percent gain on the week, its fourth straight weekly rise.
U.S. crude <CLc1> was down 15 cents at $40.05. It had also gained $1 earlier to a new year high of $41.20. For the week, it was on track to rise 4 percent, up for a fifth week in a row.
"It's been a big week for oil, so it's logical for short term bulls to take some profit before the weekend," said Pete Donovan, broker at Liquidity Energy in New York.
Oil has surged about 50 percent from 12-year lows after the Organization of the Petroleum Exporting Countries (OPEC) floated the idea of a production freeze two months ago, boosting Brent from about $27 and U.S. crude from around $26.
OPEC kingpin Saudi Arabia and non-OPEC producers led by Russia will meet in Qatar on April 17 to further the initiative that could result in the first global oil supply deal in 15 years.
U.S. crude inventories hit a fifth straight week of record highs last week but the build of 1.3 million barrels was less than half of forecasts. Gasoline demand, meanwhile, jumped 6.4 percent over the past four weeks from a year ago.
The market is looking out for the U.S. oil rig count due around 1:00 p.m. from oil services firm Baker Hughes to see if energy firms cut drilling activity again this week. The oil rig count has fallen the past 12 weeks while total oil and gas rigs were the fewest since at least 1940.
(By Barani Krishnan; Additional reporting by Simon Falush in LONDON; Editing by Marguerita Choy)