Oil at 2016 high above $40 per barrel after producer price support talk

Mon Mar 7, 2016 3:38pm EST
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By Barani Krishnan

NEW YORK (Reuters) - Global oil markets jumped more than 5 percent on Monday, with Brent hitting a 2016 peak above $40 a barrel, after Ecuador said it was holding a meeting of Latin American crude producers as OPEC sought a higher anchor price for oil.

Technically-driven buying in crude and a commodities rally also boosted oil. Industry data showing a smaller-than-expected build in stockpiles at the Cushing, Oklahoma delivery hub for U.S. crude futures was another supportive factor.

Oil has rallied more than 50 percent since hitting 12-year lows less than two months ago. The rally began after Russia and the Organization of the Petroleum Exporting Countries floated the idea of a production freeze to support prices in an oversupplied market.

Ecuador's Foreign Minister Guillaume Long said his government will host a meeting in Quito on Friday with Venezuela, Colombia, Ecuador and Mexico "to reach consensus over oil, especially prices."

Separately, major OPEC producers are talking about a new oil price equilibrium of around $50, New York-based consultancy PIRA told Reuters.

"It's more confirmation that oil producers are close to achieving some kind of a deal on price support," said Phil Flynn, analyst at Price Futures Group in Chicago. "It's feeding bullish sentiment into a market that's turned 180 degrees from where it stood just weeks ago."

Brent LCOc1, the global crude benchmark, settled up $2.12 at $40.84. Its session peak was $41.04, the highest since Dec. 9. That was 51 percent above the 12-year low of $27.10 on Jan 20.

U.S. crude CLc1 finished up $1.98 at $37.90 a barrel, near a 2-month high. On Feb. 11, it hit a 2003 low of $26.05.   Continued...

Pump jacks are seen at the Lukoil company owned Imilorskoye oil field, as the sun sets, outside the West Siberian city of Kogalym, Russia, January 25, 2016. REUTERS/Sergei Karpukhin