Oil prices swung in volatile trading yesterday, falling back later after hitting 2016 peaks. However they remained on track to record multi-week gains on expectations of a production freeze by major exporters and stronger US fuel demand.

Strength in world equity markets, which were up for a fifth week, had also boosted oil earlier. Shares of US energy companies traded near 3½-month highs on Wall Street.

Brent crude was up 1 cent at $41.55 a barrel by yesterday evening, having risen $1 earlier to a 2016 high of $42.54. It was on track to a 3 per cent gain on the week, its fourth straight weekly rise.

US crude 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 per cent, 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.

Boosting Brent

Oil has surged about 50 per cent from 12-year lows after the Organisation of the Petroleum Exporting Countries (Opec) floated the idea of a production freeze two months ago, boosting Brent from about $27 and US crude from about $26.

Opec kingpin Saudi Arabia and non-Opec producers led by Russia meet in Qatar on April 17th to further the initiative that could result in the first global oil supply deal in 15 years.

US 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 per cent over the past four weeks from a year ago.

The market is looking out for the US oil rig count from oil services firm Baker Hughes to see if energy firms cut drilling activity again this week. The rig count has fallen the past 12 weeks while total oil and gas rigs were the fewest since at least 1940. – (Reuters)