* Dollar drops against basket of currencies .DXY
* WTI also receives support from reports of U.S. crude
exports
* Funds pour new money into oil markets - broker
* But analysts warn that a global supply overhang remains in
place
* Iran intent on raising output to regain market share
(Adds U.S. crude exports, comment, updates prices)
By Henning Gloystein
SINGAPORE, March 11 (Reuters) - Oil prices jumped on Friday
supported by fresh investment and a weaker dollar, which makes
fuel cheaper for importers using other currencies, but analysts
warned that a stronger price rally was premature as a global
glut remained in place.
U.S. crude futures CLc1 were trading at $38.64 a barrel at
0749 GMT, up 80 cents and over 2 percent from their last close.
Traders said reports that commodity merchant Gunvor was the
latest company to export U.S. sweet crude also supported WTI
prices.
Brent crude futures LCOc1 were at $40.70 a barrel, up 65
cents.
May WTI's discount to May Brent has narrowed to 51 cents a
barrel on Friday from $1.23 a barrel on Tuesday.
Traders said that much of the oil price support came from
the Chinese yuan hitting its highest level in 2016 on Friday,
reflecting a global weakening of the dollar against other major
currencies .DXY . The greenback already fell sharply on
Thursday following easing measures announced by the European
Central Bank.
"It's all happening against the background of a very big
move in the euro last night... (with the) big jump in the
euro/dollar last night requiring a compensating move in the
yuan," said Ric Spooner, chief market analyst at CMC Markets.
China's demand exerts a strong influence on the oil markets
as its government is taking advantage of low prices to build
strategic reserves and gasoline consumption is soaring because
of rising car sales in the world's second-biggest oil user.
A weaker dollar is supportive for oil prices as it makes
dollar-traded oil cheaper for countries like China, potentially
spurring fuel demand.
Traders said prices also received support from fund money
flowing into oil markets.
"The funds have turned bullish and the market seems
determined to stay at or around $40," said Pete Donovan, broker
at Liquidity Energy in New York.
Yet analysts warned that the price rally could be
short-lived as a glut remained in place, especially as a meeting
between major producers to coordinate a freeze in output looked
unlikely to even take place since Iran would not commit to
attending.
A global glut in supply means that over 1 million bpd of
crude is being produced in excess of demand and that has left
storage tanks around the world brimming with unsold oil.
Analysts say that a fundamental reduction in supplies, for
instance through a production cuts, must happen before prices
can move higher.
HSBC economist Fred Neumann said "the problem... lies with
all the extra supply (e.g. Iran) that has poured onto markets.
That means that even a (demand) pick-up in China, in any event
likely to be marginal, may not be enough to sustain the latest
rally."