Summary Oil prices rallied for a second straight day Thursday, pushing US crude above $40 a barrel.
NEW YORK (AFP) - Oil prices rallied for a second straight day Thursday, pushing US crude above $40 a barrel for the first time this year.
Prices were lifted by a sharp drop in the dollar and revived optimism that producers would strike a deal next month to freeze output.
US benchmark West Texas Intermediate for delivery in April jumped $1.74 (4.5 percent) to $40.20 a barrel on the New York Mercantile Exchange. It was the first time WTI closed above $40 since December 3.
In London, Brent North Sea crude for May delivery, the European benchmark, finished at $41.54 a barrel, a gain of $1.21 (3.0 percent) from Wednesday s settlement.
Bob Yawger of Mizuho Securities USA said the big reason for the rally was Wednesday s Federal Reserve policy signals, which included scaling back the path for future US interest rate increases.
The Fed moves sent the dollar lower against other major currencies for a second straight day, weighing on crude oil, which is priced in the US currency.
"You have a weak dollar today and the reverse correlation with crude oil is going to rally crude," Yawger said. "The dollar index, for example, is at a five-month low while at the same time you see a three-month high in crude oil. That s why you see so much strength."
The prospect of production freeze talks on April 17 between OPEC and non-OPEC producers also continued to support the market.
But central banks are playing a part, too, said Matt Smith of ClipperData.
"While producer jawboning has played its part in igniting a crude oil short-squeeze, central banks area are as much responsible for the recent rally," he said.
"Negative rates, stimulus measures and ongoing accommodative monetary policy have boosted market sentiment."
