(In paragraph 6, corrects Brent June settlement figure to
$40.33, not $39.75)
* Brent, U.S. crude up double digits this month, most since
April
* Rally could fade as output freeze falls short of
expectations
* Brent price seen averaging $40.90, WTI $39.70 in 2016-
Rtrs poll
By Barani Krishnan
NEW YORK, March 31 (Reuters) - Oil prices jumped more than
10 percent in March in the best quarter since mid-2015 although
some analysts said the rally could fade soon as an output freeze
plan by major crude exporters fails to alleviate worries of a
glut.
A weak dollar and data showing a drawdown in crude stocks at
the U.S. futures delivery hub helped oil settle steady to firmer
in Thursday's session.
But traders remained worried that a tentative agreement
among the world's largest producers to keep oil output at
January's levels will barely make a dent on global supplies.
Analysts said crude futures also appear to have overextended
gains with a 50 percent rally since the deal was proposed
mid-February, amid little improvement in fundamentals.
"Oversupply still persists due to resilient U.S. production,
even if declining moderately; high OPEC output, led by Saudi
Arabia and Iraq; and the gradual return of Iran starting Q1
2016," said Mike Wittner, global head of oil research at Societe
Generale.
Brent crude for May delivery LCOK6 , which expired as the
front-month contract, settled up 34 cents, or 0.8 percent, at
$39.60 a barrel. June Brent LCOM6 closed 0.7 percent higher at
$40.33.
The benchmark's front-month soared 10 percent higher in
March - its best month since April 2015 - and jumped 6 percent
in the first quarter - its best quarter since the second quarter
in 2015.
U.S. crude futures CLc1 settled at $38.34, up 2 cents on
the day, rising 14 percent in March and 4 percent in the quarter
- also its biggest quarterly gain since June 2015.
In a Reuters poll, oil analysts raised their average price
forecasts for 2016 for the first time in 10 months - Brent
averaging $40.90 and U.S. crude $39.70 in 2016 - but cautioned
the rally could fade near term.
On Thursday, the dollar .DXY hit a mid-October low, making
greenback-denominated oil more attractive to holders of the euro
EUR= and other currencies. FRX/
Data from market intelligence firm Genscape showed a
807,496-barrel drawdown in stocks at the Cushing, Oklahoma
delivery hub for U.S. crude futures in the week to March 29,
traders said.
Inventories at Cushing have receded from record highs for
two consecutive weeks, with U.S. government data on Wednesday
showing a 272,000-barrel drawdown in the week ending March 25.
Total U.S. crude stocks, however, rose 2.3 million barrels
last week to 534.8 million barrels, a record high for a seventh
straight week. EIA/S
OPEC crude output rose in March to 32.47 million barrels per
day from 32.37 million bpd in February, a Reuters survey said.
Analysts also expect an April 17 meeting of major oil
producers in Doha to discuss the output freeze to fall short of
expectations.
"There is a clear risk of disappointment and for a temporary
setback in prices ahead or immediately after the Doha meeting,"
Carsten Fritsch, commodities analyst at Commerzbank (DE:CBKG), told the
Reuters Global Oil Forum.
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For a chart on U.S. crude http://reut.rs/1M1OOya
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