Oil climbs on hopes for output cut, dollar slips

Thu Jan 28, 2016 4:23pm EST
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By Richard Leong

NEW YORK (Reuters) - Crude oil prices rose on Thursday to their highest in three weeks on hopes for a pact among oil producers to cut output, while the dollar slipped on bets that interest rate hikes by the Federal Reserve would be more gradual than it has suggested.

The rebound in the oil market lifted share prices on Wall Street and other stock markets in another rollercoaster session. European stocks fell on disappointing earnings reports.

The persistent volatility in U.S. and European equity markets underpinned demand for U.S. and German government bonds.

However, gold, normally considered a safer asset in times of turbulence, retreated from 12-week highs.

"Once the oil market establishes stability, it would be good for the global economy," said Ron D'Vari, chief executive at NewOak Capital LLC in New York.

Russian energy minister Alexander Novak and a senior Gulf OPEC delegate suggested that major oil producers may pare production in an effort to ease a global supply glut that has hammered oil prices over the past year and a half.

It remained unclear whether a deal to cut production by up to 5 percent would be struck anytime soon.

Benchmark Brent futures LCOc1 jumped as much as 8 percent to nearly $36 a barrel before ending up 79 cents or 2.39 percent at $33.89 a barrel. U.S. crude CLc1 rose 92 cents, or 2.85 percent, at $33.22 per barrel.   Continued...

A trader works on the floor of the New York Stock Exchange January 27, 2016. REUTERS/Brendan McDermid