U.S. oil falls after flirting with 2016-high

By Aaron Sheldrick
TOKYO, March 18 (Reuters) - U.S. oil futures flirted with
new highs for 2016 on Friday, adding to strong gains the
previous session as optimism grew that major producers would
strike a deal to freeze output, while a more benign interest
rate environment also supported prices.
U.S. crude CLc1 was down 5 cents at $40.15 a barrel at
0031 GMT, after rising as far as $40.55 - its highest so far
this year.
On Thursday, the contracted rose 4.5 percent to close at
$40.20, after climbing as high as $40.26.
Brent crude's front-month contract LCOc1 was down 18 cents
at $41.36. It finished up $1.21 at $41.54 a barrel on Thursday,
after earlier reaching the year's peak of $41.60, a level that
was matched earlier on Friday.
Oil prices have surged more than 50 percent from 12-year
lows since the Organization of the Petroleum Exporting Countries
floated the idea of a production freeze, boosting Brent from
about $27 a barrel and U.S. crude from around $26.
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.
But some are urging caution after the strong gains.
"Global fundamentals are little changed and oil has instead
been lifted by higher risk-appetite," BNP Paribas (PA:BNPP) said in a
note.
"A dialogue among key producing countries to address oil
output will at best yield a decision to freeze output, but not
the much-needed reduction required to rebalance the market," BNP
said.
BNP estimates there will be a 1 million barrel increase in
global stocks by the end of the first half of 2016.
Still, a weakening dollar .DXY after a Federal Reserve
policy decision on Wednesday that indicated two U.S. rate hikes
this year instead of four is also attracting oil buyers that
hold other currencies.
OPEC kingpin Saudi Arabia and non-OPEC producers led by
Russia will meet on April 17 in the Qatar capital Doha, aiming
for the first global supply deal in 15 years.