Oil prices saw slight increases in Asian trade on Friday reaching new highs for 2016 following strong gains the previous session. The oil sector seems confident that major oil producers will strike a deal to freeze output and the current secure interest rate environment has investors optimistic that prices will continue to rise.
U.S. crude was down 5 cents at $40.15 a barrel at 8:30 a.m. after rising as far as $40.55, its highest so far this year. On Thursday's U.S. session, the contract rose 4.5 percent to close at $40.20, after climbing as high as $40.26.
Brent crude's front-month contract was down 18 cents at $41.36 but finished up $1.21 at $41.54 a barrel on Thursday in the U.S., after earlier reaching the year's peak of $41.60, a level that was matched earlier on Friday.
Strong Rally Since Feb
Since settling at a nearly 13-year low of $26.21 a barrel on Feb. 11, U.S. oil prices have shown a wide rally, buoyed by expectations that low prices would force producers to curtail output and that the global glut of the past two years would begin to abate. The rebound has also been fueled by a weakening U.S. dollar amid slackened expectations for U.S. interest-rate increases this year.
U.S. oil is heading for a fifth week of gains, the longest rising streak in about a year, while Brent is on course for a fourth weekly increase, the longest run in about 12 months.
Caution of continued gains is being advised as the market is still oversupplied and although U.S. producers have cut back output moderately, Iran continues to ramp up production after international sanctions were lifted in January.