NEW YORK Oil markets jumped nearly 2 percent on Thursday, scaling 2016 highs for a third straight day as a weaker dollar had investors shrugging off record high U.S. crude inventories and relentless pumping by major producers.
Oil prices have surged nearly 80 percent since hitting 12-year lows of around $27 a barrel for Brent in late January and about $26 for U.S. crude in mid-February.
For April, the two benchmarks are up about 20 percent, on track for their largest monthly gain in a year.
The rally, partly driven by the 5 percent drop in the dollar this year, accelerated even tough U.S. government data showed on Wednesday that crude stockpiles swelled to all-time highs above 540 million barrels. [EIA/S]
Brent futures LCOc1 weere up 87 cents at $48.05 by 1:48 p.m. EDT (1748 GMT). Earlier, Brent set a 2016 high at $48.07.
U.S. crude's West Texas Intermediate (WTI) futures CLc1 rose 70 cents to $46.03, after hitting 2016 highs at $46.06.
"The market seems 'invincible,' and well supported my money flow," said Scott Shelton, broker at ICAP in Durham, North Carolina.
The dollar tumbled, making oil denominated in the greenback more attractive to holders of the euro and other currencies. [FRX/]
Analysts believe the global oil glut will ease from the second half of this year, and traders and investors have been pushing prices higher in hopes they are right.
"Clearly, the market is primarily focussed on the forward supply-and-demand picture while continuing to push the bearish nearby fundamentals further into the background," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
While U.S. oil production has fallen, imports of crude have risen and the global glut looks to grow as major exporters from Saudi Arabia to Russia and Iran ramp up output in a battle for market share.
"Imports to U.S. Gulf Coast refineries have shown broad-based strength. Saudi imports haven't been at this level since April 2015," said Matt Smith of crude cargo trackers Clipperdata, which noted inflows 1.2 million barrels of Saudi crude in the United States last month.
Oil near or above $50 a barrel could make drilling attractive again for U.S. shale producers, which would add to the glut and pressuring prices.
"For producers struggling to meet debt payments and avoid breaching the terms of loan covenants, rising prices are a chance to lock in future revenue and reduce downside risks," Reuters analyst John Kemp said in a commentary.
(Additional reporting by Ahmad Ghaddar in LONDON and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy)
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Updated Date: Apr 29, 2016 01:00 AM