Crude oil rises on hopes of deal

The rebound in the oil market yesterday lifted shares on Wall St and other stock markets in another roller-coaster session. Photo / iStock

Crude oil prices have risen to their highest in three weeks on hopes for a pact among oil producers to cut output, while the US dollar slipped on bets that interest rate hikes by the Federal Reserve would be more gradual than it has suggested.

The rebound in the oil market yesterday lifted shares on Wall St and other stock markets in another roller-coaster session.

"Once the oil market establishes stability, it would be good for the global economy," said Ron D'Vari, chief executive at NewOak Capital in New York.

Russian Energy Minister Alexander Novak and a senior Gulf Opec delegate suggested oil producers might pare production in an effort to ease a supply glut that has hammered oil prices over the past year and a half.

It remained unclear whether a deal to cut production by up to 5 per cent would be struck any time soon.

Benchmark Brent futures jumped as much as 8 per cent to nearly US$36 a barrel before ending up US79c, or 2.39 per cent, at US$33.89 a barrel. US crude rose US92c, or 2.85 per cent, at US$33.22 a barrel.

Tumbling energy prices, stemming from worries about weakening demand from world No2 economy China, have roiled financial markets. This was a concern the Fed cited as a factor for keeping its key policy rate at 0.25-0.50 per cent on Thursday.

The Fed's worry over global and financial developments spurred selling in the US dollar against most major currencies.